Grub and the kernel (can) see the root as a different partition.
Grub looks for the kernel and the kernel looks for init (psid 1).
>From my grub.conf
title Fedora Core (2.4.22-1.2174.nptl)
root (hd0,1)
kernel /vmlinuz-2.4.22-1.2174.nptl ro root=LABEL=/1 hdc=ide-scsi
vga=795
initrd /initrd-2.4.22-1.2174.nptl.img
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jludwig <wralphie at comcast.net>