So I just installed Plugbox Linux on my pink PogoPlug v2, which was selling for about $50 on Amazon when I bought it last week.
The only problem I had was solved when I put my entire Plugbox Linux distribution on a partition of my USB stick that was only 4GB (or smaller). I used an ext3 file system, but an ext2 file system works as well (and probably FAT too). I made the partition bootable in the partition table, but that isn't necessary with the way the current version of u-Boot looks for the kernel. u-Boot looks for a partition with /boot/uImage on it. Others say that they've put /boot on a small 32MB partition by itself, but I had to put everything on one partition.
To figure all of this out, I did enable the netcat console. That let me watch u-Boot as it booted before it hands things off to the kernel on uImage. However, if I would have used a 4GB partition (or smaller) to begin with, I don't think I would have even bothered setting up the netcat console.
Hopefully everything keeps working!