Description of Problem:

If tmpfs happens to be used for /tmp then mkinitrd, hence also
mkbootdisk and kernel updates, fail because one cannot, at least
currently, to mount over a loop device a file which resides on a file
system of a tmpfs type.

A quick workaround, which has pretty good chances to work, is it use
/var/tmp instead with a possible override in an evironmental variable.
An attached patch does just that.

Somewhat better would be to allow to specify other then a default
temporary directory on a command line.  But to make this work reasonably
reliably with kernel updates mkinitrd should test if it tries to use
files on tmpfs and switch to another file system if this is the case
(or / could be simply used here as chances that it is of a tmpfs type on
a normal installation are rather slim :-).