We are pretty pleased with this effort and looking forward to official support in FC5.
Proper FC5 support is conditional on actually being able to boot from the CD-ROM. The current firmware on the Pegasos II doesn't handle ISO9660, as is required by CHRP. I'm not sure if network booting is working either. At the moment, we still have to hack up our own 'boot.ext2' CD for Pegasos.
Well, it doesn handle iso9660, there is just a little glitch in the read method i am fixing, load is ok though. network booting works just fine (and is lightyears more friendly to do than on apple hardware, just tried to do netbooting on my powerbook yesterday, don't even let the dhcp serverset the booting filename, not to mention that yaboot is over--buggy when using the rarp method).
As for CD booting, i think the proper way would be for you to use the nifty mkzimage or mkvmlinuz tool to produce a kernel with builtin initrd, and add it to the CD iso, you said you have place on it, so you can easily boot that on pegasos, there should be not problem with disk yaboot support for the installed system. Also, grub2 is known to work just fine on the pegasos.
Anyway, what is the release schedule of FC5 ? A couple of month of ? We should definitively have this fixed ways before then :)