I went completely through README.initrd and it dawned on me that maybe all the options you need to ext3 might apply to ext4. Here is what worked. Note to self... to avoid confusion, do _not_ mkdir /mnt/something to mount the disk to chroot to. Methinks that is not a smart move... ;-]
boot off dvd
mount /dev/sda1 /dora [note the lack of /mnt/dora...]
mkinitrd -c -k 126.96.36.199-smp -m pata_sch:mbcache:jbd:ext4 -f ext4 -r /dev/sda1
vi /etc/lilo.conf [verify correct initrd command is still there]
exit [exit from chroot environment]
System came up to a prompt. X runs. Added me as a user [btw, using up-arrow at the "additional groups" saves a ton of work!] Added wheel to the list of groups and I should be all set.
Now, to tackle the Poulsbo/GMA500 intel chipset. I hear there might be linux drivers released soon. Should be sweet on this 1366x768 netbook. Ubuntu has rudimentary 3d working....
oh, that and making this so it is a stand-alone installer [meaning boot off a kernel with pata_sch support built-in].
Thanks all! [do I mark the thread SOLVED, or does some op watch these things?]