I tried various partition sizes for the DOS and the ext2 partitions. I tried both FAT16 and FAT32 for the DOS partition. Nothing worked. I could copy the root filesystem over just fine, and even mount it and see the files. But when I tried to boot from it, it would fail and then boot to internal flash. I also tried updating the kernel to the patched version that allows for faster access to the mmc cards. No difference.
dmesg >/tmp/dmesg.out
chroot /mnt/initfs