The problem stems from not having the date/time set - so your password ages as soon as you login.
With a network connection this isn't a problem.
This is definitely a wrinkle that will need ironing out.
Ok, yes, there is a issue with the remix. It is not password ageing in the usual sense -- that is not enabled. The problem is that shadow-utils treats 1970-01-01 magically:# chage -d 1970-01-02 $USER && chage -l $USER
Last password change : Jan 02, 1970
Password expires : never
# chage -d 1970-01-01 $USER && chage -l $USER
Last password change : password must be changed
Password expires : password must be changed
So, prior to running ntpdate, which might fail, the init scripts should set the date to anything but 1970-01-01. 2012-02-29 06:00:00 UTC perhaps?