When you boot up does it initialise your lan/wireless and sshd, on bootup on my 3200 the CF wireless card light comes on half way through boot, and if you have a hang after that you could connect remotely with ssh from another machine and then reinstall the package.
Alternatively, is there any way to mount the root filesystem from the recovery shell? I've never tried but if you can then you would need to extract the files from the busybox ipk and place them in the root retaining the folder structure in the ipk.
I'm surprised that a critical package such as busybox is un-installable, looks like we need to be careful there.
Another way - if you have no precious files in the root filesystem - is to reinstall without reformatting the microdrive, as long as the original partition layout is intact you should be able to reinstall without wiping it. Not sure what happens if you have a /home partition on the flash memory though.
Hope you get it fixed