Ah hah, I've figured out an ok solution.
To cleanly exit gpe you need to make a little script that runs:
/etc/rc0.d/K99gpe-dm stop
/bin/login
If you don't run "login" it probably will just sit there after it exits gpe.
If you don't want GPE to start up at all, just edit the /etc/rc0.d/K99gpe-dm script.
Comment out the line "/usr/bin/gpe-dm" and add "login". So:
#/usr/bin/gpe-dm
/bin/login
Then when it boots it will do a console login. This probably isn't the best solution, because it sort of gets stuck running the K99gpe-dm script (you can see it in "top") an I imagine that some other scripts after it don't get run until that one finishes. So, probably, just commenting that gpe-dm line out is a good first step, then finding the last script that is run on boot, and putting /bin/login at the end of it would be the best thing.
But with this solution all the hardware works, anyways. Just run "gpe-dm" to load gpe.
I am using debian pocketworkstation and it runs smoother now. I enabled X11forwarding for the sshd server (see /etc/ssh/sshd_config and ssh_config) so I can ssh to myself (127.0.0.1) from within the debian environment and connect to the pure openzaurus environment. From there I can run any of GPE's programs, because it forwards all the graphics to debian's X server, which is very handy for running "gpe-conf" to configure the light and sound. I actually ran "gpe-login" through ssh and it gave me a windowed login screen and it even loaded up my gpe navigational bar at the bottom of my screen.
Has anyone tried
http://people.debian.org/~mdz/zaurus/index.html? It's a more pure debian install that directly accesses the hardware (uses parts of openzaurus). I don't think it works very well yet with the zaurus hardware, so I'm afraid to try it.