Did not try. Might be related to power management then. Serial console basically turns any sleep modes off. When it doesn't work, it might help to try something like
- disable dyntick + sleep_while_idle (in linuxrc)
hopefully this might be enough if r&d flags + serial console flags helps but maybe you already tried this?
- do not play with cpufreq governor (also in linuxrc)
- disable unneded drivers in kernel to get as little hardware initialized as possible (cpufreq is not needed at all and messes with various clocks, ...)

Basically we need only stripped down kernel (no matter which version) that could load any main kernel from flash or mmc via kexec (something like LAB (Linux As Bootloader) idea for iPaq). I was thinking about putting such mini kernel before main kernel in kernel partition so it could load the main one transparently as default choice to keep maximum compatibility. The mer/bootmenu install procedure could then read the main one, prepend our small one and put them back. Most probably the small one would need also some initial ramdisk userspace for the menu. But I guess you already though about it too.