I was using earlier altboot, something like version ..r22 from the hentges.net site, and it worked to boot an SD image. I upgraded to altboot package in the 3.5.4 feed, and now I can no longer see any altboot prompts, and it goes straight to booting the root filesystem in the internal flash. The latest version ..r44 on the hentges.net site does the same thing. It's acting like ENABLE_ALTBOOT is set to "no", even though it is set to "yes" in the 2.4 and 2.6 config scripts. I can tell that /sbin/init.altboot is being used because I can see messages from the script being echoed when I shutdown and reboot.
5600 with OZ 3.5.4 and Opie.