ok. more digging here. Looks like my ubifs partition is badly "injured" (which according to ubifs zealots is impossible).
it looks like is recovery is trying to read something (i think the device serial - as I think is inserted later during update)
[ 16.404747] EXT2-fs (ram0): error: ext2_check_page: bad entry in directory #4136: : directory entry across blocks - offset=1024, inode=1073783265, rec_len=41760, name_len=131
[ 16.420664] EXT2-fs (ram0): error: ext2_check_page: bad entry in directory #4218: : rec_len is smaller than minimal - offset=0, inode=0, rec_len=0, name_len=0
[ 16.434924] Kernel panic - not syncing: No init found. Try passing init= option to kernel. See Linux Documentation/init.txt for guidance.
[ 16.447391] Rebooting in 1 seconds..
and than fails and reboots. looks like the menu / rotate buttons are working, but the recovery is crippled not to proceed if the serial on sys/class/graphics/fb2 properties is missing. anybody has an idea about a modified update.zip that does not check this?
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