Root can't be your problem. I've updated to that release; Android 2.2.1, Blur 34.4.9, Build # 3.4.2.107_IDN-9, while my system was rooted. My phone was quite customized (Go Launcher with some "foreign" widgets and no Blur apps/widgets except for the Email app to get at my work e-mail) and everything came up OK. I was rather surprized how smoothly it all went. All my data (seemed to be mostly e-mail) had to be re-synched (this happened automatically), and it took one reboot to clear a message about non-Moto battery that was displayed after the first boot. Basically it all is where it was, except, of course, for root (I tried the latest, 1.7, SuperOneClick but it's looping no matter what I do).
Good luck.
[Added]
Well, well. It turned out that even though it seemed that SuperOneClick was failing (looping at trying to mount a partition R/O) it actually it did it's job! I just fired up RootExplorer and lo and behold a confirmation from Superuser for root popped up, got accepted, and I can start renaming the bloatware again. Woo hoo!
So If someone could point me in the right direction it would be appreciated.
