Using the Beta4 images, RPMS's and base files, I tried placing everything from gribble/beta4/i386 in the /RH dirctory of my DOS/VFAT filesystem (since installing off of a PCMCIA SCSI device still doesn't work). So at install time, I specified that I was installing off local disk, I specified /dev/hda1 as the filesystem (which was my VFAT filesystem), and /RH as the directory path to the RedHat programs. This failed, with RedHat saying it couldn't find the installation directories. I then moved /RH/RedHat to the top level (i.e., /) of the VFAT filesystem, and then tried specifying /dev/hda1 and / as the location for the local repository for RPM files. This time, it worked. So think there is still something faulty in the logic around that code, however.
This sounds like it's been fixed in Red Hat 6.0. Please reopen if I'm wrong.