Thanks to wonderful Mint community I finally managed to install Mint 8 on a HDD 
and see how the bug looks from there.
It seems that the scope of the bug is smaller than I initially thought. A 
reboot fixes the problem. The bug only exists if you update udev and log out, 
but do not reboot the whole system.

This means that for a HDD installation the severity of this bug is
small, but for a LiveCD a reboot is not an option for obvious reasons.

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Input freeze on udev update while on Live CD
https://bugs.launchpad.net/bugs/497512
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