Adding vga=791 to defoptions in /boot/grub/menu.lst resolved the black
screen part

But there's no login prompt, only a "_" character in every VT

I'm sure getty is working:
root      4980     1  0 09:50 tty4     00:00:00 /sbin/getty 38400 tty4
root      4981     1  0 09:50 tty5     00:00:00 /sbin/getty 38400 tty5
root      4983     1  0 09:50 tty2     00:00:00 /sbin/getty 38400 tty2
root      4984     1  0 09:50 tty3     00:00:00 /sbin/getty 38400 tty3
root      4985     1  0 09:50 tty1     00:00:00 /sbin/getty 38400 tty1
root      4987     1  0 09:50 tty6     00:00:00 /sbin/getty 38400 tty6

-- 
Cannot switch to VT from Xorg (Gutsy)
https://bugs.launchpad.net/bugs/149413
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