On my system using 2.6.7-11 successfully got past the hang.

It's a Toshiba laptop (P305D-S8828), RM-70 proc.  Previously, system
would consistently hang at starting powernowd.  Changing "Dynamic CPU
Frequency Mode" in the BIOS to "Always Low" was the only way to get a
successful boot.

Now using 2.6.27-11, the setting can be kept at "Dynamic" in BIOS.  Due
to a different problem later in the boot process I couldn't get
completely through to the desktop.  But it got past the powernowd point
every time.

Hope this helps.

-- 
Kernel Bug related to CPUFreq; Causes Powernowd to hang
https://bugs.launchpad.net/bugs/308787
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