Started using a different shell app, I think it logs in as root but also behaves properly, ifconfig and apt-get actually do something.
So int bt-pan shows up on the nexus as created and linked, but just like ad-hoc wifi it is not taking an IP form the dhcp on the N900.
Wish I knew what was the equivelant of /var/log/syslog on android/cyanogen so I could watch the connection log.