It will, once you set up correct configuration in bootmenu.conf. Read README and/or bootmenu.conf.nXXX.example

You need to set MENU_X_FSTYPE and MENU_X_MODULES correctly for your menu item X.

Oh, BTW ext3 is backward compatible so it should boot as ext2 too. Then it might be good to fsck it before switching to ext3 again.

No, I tried booting/mounting as ext2 and this did not work. I copied the ext3 settings from the example in n800 conf file.

MENU_1_NAME="Internal flash"
MENU_1_ID="flash"

MENU_2_NAME="MMC card"
MENU_2_ID="mmc"

MENU_3_NAME="MMC card, partition 2, ext2"
MENU_3_ID="mmc2"
MENU_3_DEVICE="mmcblk0p2"
MENU_3_MODULES="mbcache ext2"
MENU_3_FSTYPE="ext2"
MENU_3_FSOPTIONS="noatime"

MENU_4_NAME="MMC card, partition 2, ext3"
MENU_4_ID="mmc02"
MENU_4_DEVICE="mmcblk0p2"
MENU_4_MODULES="mbcache jbd ext3"
MENU_4_FSTYPE="ext3"
MENU_4_FSOPTIONS="noatime" #",data=writeback"

MENU_5_NAME="Power off (when not on charger)"
MENU_5_ID="off"

#change max if you add/remove items
MENU_MAX=5

I insmodded the same kernel modules booting off of flash and I could mount the partition.

The problem was the ext3 was not cleanly unmounted and there was still journalling data. Have to figure out how to cleanly dismount with the n800 if it doesn't already (I don't think it does.) That is probably the OP problem as well.

add the mountpoints to umount line in /etc/init.d/minireboot and minishutdown.
look for this section near the end og the files:

echo "Unmounting filesystems... "
umount -r /media/mmc1 /media/mmc2 /mnt/initfs /

If you don't have any custom mount points, it does. When system is cloned to MMC there is no modification needed. Well except tweaking the USB storage script in OS2007 if you want to see the card you are booting from over USB.