Well....Here's what I did:

(Note the first time I installed Display server, I put it on the root parittion. This time, i installed it to /drive0)

I downgraded the kernel back to the 1.03. I installed Dispaly Server. Everything worked. I then installed the Hijack Kernel using Logoedit. Display Server still worked (Becuase the file system is untouched by Logoedit, just the flashram is changed). I then tried the RioUpgrade Utility to upgrade to the "official" 2.0b7dev kernel. The upgrade installed fine. But of course, Display Server was broken. Even though I installed Display Server into /drive0 which was untouched, DS still installs files to the root, which gets wiped.

My next set is to: Downgrade to 1.03, install DS. Upgrade to 2.0b7 using the prebuilt kernel zImage on Mark's web site and Logoedi. I'm thinking that this will give me a working 2.0b7 kernel with Display Server.

On a semi-random side note, has anyone noticed the difference between Mark's Hijack Kernel and the "official" 2.0b7 kernel that it's supposed to be built on? There's a huge difference in the UI and menu design. The Hijack Kernel looks like it's still using 1.03 for it's UI.