Sadly, I didn't find a fix for this problem, but I did find a workaround just to get Ubuntu booting on the Macbook (which is the ultimate goal, anyway): I ended up pulling the hard drive sled back out and connecting it directly to a desktop PC, and installing Ubuntu on it that way. (This was complicated by the fact that I was using an external DVD drive because the internal one is broken, and Apple won't let us boot 'legacy' OS stuff from an external drive)
I tried creating bootable USB sticks and CDs, both on the PC and on the Macbook, and nothing would boot up to install. I was struggling with a fix for this issue myself, overnight, when installing a new drive in my black Macbook 2,1.
