Weired. I use apt-get update & upgrade on my N800 and it works flawlessly. Before I reflashed (wich I did not because of anything broken, but to start on clean as I learned a lot by making mistakes) I was using red-pill mode and I think I had no problems with apt-get.

And I have added all repositories from http://www.gronmayer.com/n800/repos/

I used that website for my repositories as well. After you 'upgrade' and go back into application manager, did you find that some packages did not install? I did, and after I used application manager to install one of these leftovers, the 770 went into its infinite loop. I wonder if I would not have had any problems if I had run apt-get and left it at that....