I have the same issue here, physical server runs CentOS 6.0, VE runs
Ubuntu.

You can easily grant access to the physical version of /dev/console with
the following command on your physical server:

vzctl set 105 --devices c:5:1:rw --save

Replace 105 with the number of you VE.

After this, reboot and init will no longer be hogging 100% cpu.

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https://bugs.launchpad.net/bugs/880049

Title:
  100% CPU usage in init if /dev/console is not available

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