you have to go the poorman's install route or you need to make your own miniroot.gz which include the necessary usb drivers(as well as CD-ROM driver) and some changes to the linuxrc.

The problem is that even your bios may be able to see the usb CD-ROM and boot from it but it mostly can only see the 'boot image'(the 1.44M one), once you boot into linux, linux still doesn't see the rest. I believe the same is true even for desktop IDE CDROM. If one do not have the IDE driver compiled in the kernel, the same thing would happen, i.e. can boot but don't see the rest.