Well that makes sense. I will try that. I didn't realize the initrd had it's own /bin setup.
Titanium backup is still not asking for root in the manner SuperUser app notices. I'll try later tonight. I can get Clocksync and MarketAccess apps to work fine before. I pretty much did all those steps above except the sysinit.rc change. After the sysinit.rc change I didn't notice any difference.
I'll restart and try if not well, I know I'm no expert.