Well, it seems no matter if I try to boot Mer or Ubuntu, from Mer bootmenu it fails.
It says it tries to load linuxrc and then it just reboots after a while.

mmkay, got it. mmcblk0 is not mmcblk0 at boot time. sneaky.

now i see gdm login but keyboard does not work.
what did i break again?

OK, it logged in after enabling autologon.
I have installed LXDE in chroot and did update/upgrade (metric shitton of packages were upgraded).

How can I calibrate the touchscreen?
It seems that tslib is doing some right click emulation, but the right click tap-n-hold time is so small that every touch causes right click.
Keyboard does not work properly - Fn key does not work. So I cannot do anything useful.

Good work. I see a lot of potential. Ubuntu,LXDE,Firefox,Claws,Pidgin and XChat and I will be happy as a clam.