A valid point, and one I hadn't thought of. So here's what finnix seems to exist as:
- An iso9660 filesystem on /dev/xvdh
- A kernel, separate from the media (3.2.0-1-amd64-finnix), which does support paravirtualization, and which is not a "normal" Linode kernel
- A kernel command line as follows: root=/dev/xvdh xencons=tty console=tty1 console=hvc0 nosep nodevfs ramdisk_size=32768 ip_conntrack.hashsize=8192 nf_conntrack.hashsize=8192 ro devtmpfs.mount=1
From there, Things Happen, and it is apparently able to find init, mount the "cdrom" on /cdrom, mount /cdrom/finnix/arch/x86/root.img on /FINNIX, then roll from there with tmpfs and aufs.
It is known that Finnix is specifically designed to work in a Linode-like environment. How much of a deviation from the usual Linux .iso workflow this requires may be a good library article

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