So what would cause adb to say "/system/bin/sh does not exist"?

Just curious since you seem to know a thing or two about this XP

I cant say, if CM9 really is still using SH, it would include it as CM has it's dependencies already included.

Is busybox and toolbox properly compiled and symlinked in your rom at least?
Busybox includes the basic SH as a symlink (i think)

You could always grab your own SH/ASH/BASH from somewhere and add it in+symlink it and see if it boots to begin with.

snarg, check your PM

Progress...

A logcat after my last build

Had to use the boot.img from ICS-B4 but it's progress

http://pastebin.com/YmVD8pn6

I made a few changes, that might resolve the boot.img issue.