I took a look at this again, and I got it to work! (Writing this from 2.6.14-2-k7 now.)
The problem for me was hinted at above, in the line "You can do 'mount -o bind / /mnt; ls /mnt/dev' to see what's there. /dev/.static/dev/ may contain an alias of this" -- apparently the important word in this sentence is "may". I did the simpler one (ls /dev/.static/dev/), and it looked OK, so I stopped looking at that; when I tried the other one, /mnt/dev/ was empty. I created 'console' and 'null' in there with mknod, and rebooted, and it came up just fine. Another page I found that discusses this, and exactly what you need: <http://www.disaggregate.com/blog/technicalweblog/archives/000012.html> Does this help anybody/everybody else? - Ken