Sadly the more experienced person the less time they have for such experiments. There is plenty of people with skills far better than ours, linux-omap list is place to meet them. OTOH sometimes skill can be replaced by luck or lot of time spent trying semi-random things :-)
Oh I see, I was confused with '/sbin/init 2' and wifi driver kernel thread and the minishutdown reference too so I thought you tried it at device shutdown time.

Using qemu may be easier, I'll try that when I have some time (pretty scarce thing for me nowadays and no sign of it getting better). qemu can boot kernel directly but in our case the better mode is to let it boot from bootloader and let the emulation run NOLO and load kernel. With real device enabling framebuffer console in both kernels (and/or having serial console attached) could help to see where it fails.

yes, jffs2 does not work directly with block devices (=mmc), tar clone or cp -a of initfs would be better and also ext2 in kernel could help a lot :-)

Yes and in that case the version of the first kernel doesn't matter much as long as it can load the diablo one from somewhere. Having one kernel as you suggested would be certainly much easier if we can get it to work.