Thanks nas!
So, quick rundown for any newbs to OpenWRT -- failsafe on the WRT54G (mine is v3 - ymmv) is achieved by pressing the 'reset' button on the back after the DMZ light comes on during boot. At this point the router should respond to 192.168.1.1 a short while later (i.e. ICMP / telnet). At that point I just wanted to start fresh, so I did the following two items:
1) I wanted to revert back to the original JFFS. When in failsafe you do not have access to JFFS (only SquashFS), so no changes are writable. To wipe out all settings in JFFS you may have configured (*cough*botched*cough*) just type: 'firstboot' at the command prompt (obviously without the quotes) and let it do it's thing.
2) I wanted to wipe out all of the cruft left in nvram from other firmware I had on the WRT54G. To do this I just ran 'mtd -r erase nvram'. This step is probably not required since Kamikaze ignores those settings, but I'm just lame like that and I want to know that there's nothing in there that shouldn't be. Again, ymmv, it worked for me and I'm not sure if there's a downside to doing that, but just my $0.02. BTW, the '-r' in the mtd command will reboot the router after it's done erasing nvram. I just did that because I had completed step 1 and wanted it to reboot. You, obviously, don't need to do that right away if you choose not to.
Thanks again to nas for pointing me in the right direction -- I know, lame I didn't run across failsafe mode earlier and I feel slightly dumb about it, but it was an honest mistake and maybe this final post will help some other shmuck in the near future. 
--windexh8er