That file needs to be text - not binary, not basic, but plain text in order to be EXEC'ed.

When doing this low-level bootstrapping of un-shrinking software by hand, I found software in this directory to be very useful:

http://mirrors.apple2.org.za/ground.icaen.uiowa.edu/useful.stuff/

Of course it is much easier to just use a tool like CiderPress to add whatever you need to a disk image and then boot that. But if you want the full experience of getting it all running from just text, don't let me stop you. ;-)