I had to mount it in target mode on the Pismo to restore the file from a backup. After that it started fine. But for those who only have 1 Mac handy this can be disastrous. Hopefully Apple will release a fix to address the problem with booting these things from the system restore disk using just the C key on bootup. But for now: You've been warned!
[Editor's note: The boot image is the picture that displays when first starting the Mac -- there's a process to do this described in this article on ryandesign.com's website. Regarding this specific problem, it may be possible that the booting troubles with the restore disk were also caused by the problematic boot image -- it's hard to believe Apple would send a batch of machines out that couldn't boot from their restore disks ... I think the general warning here is that when you're modifying low-level things such as the boot image, you're never quite sure what may happen (especially if Apple has revved the system software version!).]

