Of course, it helps if you update your bootable SD card with not only the rootfs, but also the uImage. Doing that made everything work nicely. I now have iptables functioning.

So, Phillip, I can't confirm the kernel hanging on boot that you observed. Keep in mind I built the 2.6.34 kernel, and I can see you're using 2.6.36. I might give that a try today or tomorrow to see what happens when I try the same steps on 2.6.36.