I think that initrd should be created in Minix fs. Minix is a simple filesystem that has very low overhead for small filesystems as the init ram disk. Else, it should be a USE flag to let build it in Minix fs.
Only we use initramfs for 2.6 kernels which has even less overhead as it is merely a CPIO archive... so, closing bug as INVALID. I really don't see the advantage gained for 2.4 systems, considering that 2.4 support will be getting deprecated by genkernel soon anyway...