I compiled it too and had the same issue (it doesn't want to run as root). You can either add -DALWAYS_ROOT in the makefile or patch utility/shared.c line 1305 (function dont_run_as_root) to just return. I'm trying to fix the size too, but it's not working well so far ... no yet at least
PS : to make an IPK start with one from the pdaXrom feed, untar it, untar control.tar.gz, edit control, tar with tar czf control.tar.gz ./control, create a data.tar.gz containing your package (best in a usr folder, data in usr/share, be sure you have a proper ./configure with a right --datadir to search in) with tar czvf data.tar.gz ./usr and finally tar czvf mypackage_version_armv5tel.ipk ./debian-binary ./control.tar.gz ./data.tar.gz
Don't forget the ./ ! If they are missing your package will not work.
If you compile with -mcpu iwmmxt I think it may be good to change the armv5tel suffix (so that SL-6000/SL-xx0 don't try to install it and get illegal instruction) but there is no standard yet (I'll try to contact sashz about that)