Freaky, I just did "adb push filename /system/etc" from Recovery and then I looked and /system/etc is a file. I'm like NOOOOOOOOOOOOOOO!!!
Then I rebooted and all is well. Then I went back to Recovery and looked. It's just a vfs made on the fly, and there is no /system/etc just a /system/bin so me pushing a file merely made a file there, it isn't the real /system/etc LOL that was scary!!
So seriously, any ideas on writing to /system/etc while Android is running? I did the unrEVOked 3.2.1 root a while back, I left S=ON just FYI..