well, it was just an idea but it is relatively complex to set up and is not clean enough to have practical use as a regular reboot. Better would be to have kexec working that would shutdown whole linux kernel and load and switch to another one without power cycling and going through NOLO bootloader. That would be cleaner, solve more issues (=reasons why one wants to reboot) and would not neded modification of /sbin/init and various boot scripts. And it would still avoid triggering WSOD.

as for re-initializing bluetooth you may try to run (as root)
/etc/init.d/bluez-utils stop
/etc/init.d/bluez-utils start
does it help?