freeing kernel memory. Maybe init fails? The bash I get from
init=/bin/bash only spits a error at when trying to init/telinit by hand.

Any ideas? Anybody flashed a custom kernel and got init working?

On my F12 setup the default init does work fine, just makes the boot four times slower than my custom init and scripts.

if possible, can you post your custom script?
 
Why don't you hack some

echo "hello" > /dev/ttyxyz0

into

/etc/rc.d/rc.sysinit

and see if it gets that far.
 
It reaches not even line #2, line #1 is #!/bin/bash
 

> To be specific the error msg is init: Unable to send message:
> Connection refused same for reboot, shutdown, telinit

It's normal, init running as pid 1 is meant to be listening for commands those guys send to it.  Since you never ran init as pid 1, but /bin/bash, it ain't there listening.
 
Thanks for clearing that up 

Bernhard