I booted the beta 1 CD and typed "linux rescue". It displayed the blue screen, told me it was loading my SCSI driver, thought about it for a while, moved the cursor to the bottom of the screen as if it was going to do something more, and then hung.
What is your hardware setup?
Created attachment 479 [details] My hardware configuration as shown by "dmesg"
Same behavior in beta 2.
Fixed for next beta
verified fix in internal build ... VC1 now has shell prompt (as does VC2) ...