The "bootwait" workaround was successful.

The only problem is that the I couldn't get the password prompt to show
up and had to resort to the recovery console. Even then it took me
separate attempts to get the password accepted.  I'm guessing this is
another issue already being addressed.

-- 
/etc/init.d startup scripts are not run at boot if bad (or timed-out) non-root 
volume password
https://bugs.launchpad.net/bugs/495714
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