I had HDD hardware failure, after a clean reinstall of LinuxMCE 8.10 via latest ISO image I'm back.
This procedure works for me now, after booting new kernel I tested ZWave lights and that still works as it did with older kernel. As this box is used as core and not as hybrid can't confirm if audio is working because I don't use it.
But now you know that it is safe to test out.
If you need newer kernel than 2.6.27 for 8.10 this is the easiest way to do it.
Cheers from Croatia,