OK, no output from init. You probably forgot to specify the 'rw' argument to to boot command. The kernel mounts the root filesystem readonly by default. This is done to be able to fsck the root fs before mounting it read-write. For a NFS root system, this is not needed.
Single user runs OK, multi-user seems to hang.
I can get it to work, but not elegantly. Try telnetting into your DECStation to see if it is still alive. Can't login in multi-user mode. This is solvend in the declinuxroot-current.tgz. SCSI controller is not detected.