[knc1]

Check if the 'mount' command is being provided by busybox or if it is a standalone binary.

It could be you are using the BB 'mount' command and that minimized version is missing the error message about the mount point being on a read-only file system.

Because it certainly failed in the example you give.

Another thing to check - -
Although /etc/xorg.conf is only read once, on start-up - -
It may still be held open by X11 -

So run a listing of open files, see if it is being held open.
Because if it is, it will not matter if it is over-written or even deleted, the /etc directory is on an inode file system, the original data will still be read.

- - - -

If you pause the framework, does that shutdown X11?

I.E: There should be a nice clean way to get upstart to help you, rather than fight you.