I am very very happy to say that I upgraded to Fedora 9 (binutile 2.18) and things seem to be much much better. I was able to compile tinit just fine.
I found a similar problem to the .rom/.ram can't allocate error message in a thread for binutils. Seems this was a problem in 2.17 and has been fixed.
I will try all of the other combos but it looks promising.
A note needs to be made to stay away from binutils 2.17.