I can confirm this.

I added this to my initramfs modules:

sd_mod
scsi_mod
blkbk
xenblk
netloop
netbk
xennet

After i build by initramfs and uses hda1 in my dom0.cfg the guest starts
and the network works

-- 
xend fails to connect guest to dom0 block device or loopback file
https://bugs.launchpad.net/bugs/205450
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