Hey MRobbie,
Feel your pain. I had a 8500 GT that could not boot 10.7.2 at all. For 4 days i was banging my head against the keyboard. Tried freaking everything in the book.
I changed my 8500 for an old Radeon 4670... Bam, no luck again...
Then for some reason i found this tip and it worked.
Try to use this on your org.chameleon.boot.plist:
<code>
<key>GraphicsEnabler</key>
<string>Yes</string>
<key>Kernel Flags</key>
<string>-v npci=0x2000 arch=X86_64 PCIRoot=1</string>
</code>
The -v flag is just for maintenance. I am booting here as 64 as you can see. If 64 is not feasible for you change the X86_64 part for i386.
Also, check in Verbose if your boot is KP in another item (in my case AppleHDA was KP too)
Hope it helps mate, good luck