Charlieman, I'm not sure I followed ... you say you got the system to recognize an entire 250MB Zip disk with your modified INIT? Or just as a 100MB disk?
Also, I think you are doing what I have been describing on my site and above. In my case I boot up with 6.0.4 on a single 800K floppy with the Iomega 4.2 INIT, format a ZIP 100 disk and then I can install ANY system on it. The Mac will boot up from the ZIP 100 disk running any system from .97/Finder 1.0 up and DOES NOT NEED the Iomega 4.2 INIT in the system. This works on a 512Ke & Plus. As I speculated earlier I think the volume information is encoded on the disk and the Mac simply reads it and recognizes it, which may be why you can use 800K MFS disks with 64K ROMs. You can erase data on such disks, but not format new ones (well I haven't tried to format a new ZIP 100 while booted up from one, but I'll let you know). So I would assume the same to be true with the 250MB Zip, at least you should be able to use 4.2 INIT formated ZIP 100s in it and have them be recognized.
Also, I think you are doing what I have been describing on my site and above. In my case I boot up with 6.0.4 on a single 800K floppy with the Iomega 4.2 INIT, format a ZIP 100 disk and then I can install ANY system on it. The Mac will boot up from the ZIP 100 disk running any system from .97/Finder 1.0 up and DOES NOT NEED the Iomega 4.2 INIT in the system. This works on a 512Ke & Plus. As I speculated earlier I think the volume information is encoded on the disk and the Mac simply reads it and recognizes it, which may be why you can use 800K MFS disks with 64K ROMs. You can erase data on such disks, but not format new ones (well I haven't tried to format a new ZIP 100 while booted up from one, but I'll let you know). So I would assume the same to be true with the 250MB Zip, at least you should be able to use 4.2 INIT formated ZIP 100s in it and have them be recognized.