Wifi tethering on X8: DNS is not working

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What steps will reproduce the problem?
1. Start with stock firmawre (as all of us =)) on SE Xperia X8
2. Install kernel 2.6.29.6-nAa-11
3. Install MiniCM7-2.2.1-shakira
4. Try to tether WiFi

What is the expected output? What do you see instead?
Expected have a profit. Instead internet itself is tethered, but with two 
problems:
1. Just annoying but not fatal. Bhen on battery and screen locks, the hotspot 
stops working. Tried to set WiFi sleep policy to "never", but nothing changed.
2. Fatal, makes tethering almost useless. Built-in DNS does not respond. 
Moreover, even setting DNSs on connected client statically (Google 8.8.8.8 or 
operator ones — no sence) does not help. Something prevents requests from 
passing through. DNS timeout everywhere.

Internet itself it tethered nearly ideally (and PINGs are relatively short). If 
to forget about such a trifle as using a DNS...

Note: my operator does not block access to foreign DNS servers. I tried to 
nslookup using my operator's DNSs with the same result.

What version of MiniCM you are using? On what device (X10mini, X10minipro,
X8)? Are you using Compcache/Zram? Are you overclocking/undervolting?
X8 (as said above). About Zram... I did not tune everything in this area, I use 
predefined settings from MiniCM.

What app(s) are involved in the problem?
Built-in tethering subsystem.

Have you tried rebooting your device?
So many times...

What is the adb logcat output when the problem accurs (see:
http://wiki.cyanogenmod.com/index.php?title=Logcat)
logcatteher.txt is attached.
Here we see no upstream dnsmasq severs, but it then promises to use Google's 
ones, and my operator does not block them (again, as I said above).

Please provide any additional information below.
MiniCM is just fantastic, especially compared to the f###ing stock firmware 
from SONY. But the main reason of installing it was tethering, and it does not 
function...
Thank you for your work very much.

Original issue reported on code.google.com by dlu...@gmail.com on 19 Jun 2012 at 1:20

Attachments:

• logcatteher.txt

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One idea: DNS server application tries to connect upstream servers being (why?) 
behind the same NAT that throws out UDP...

Original comment by dlu...@gmail.com on 21 Jun 2012 at 11:49

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Can be nearly worked around (not resolved!) in this way: 
http://forum.xda-developers.com/showthread.php?p=27709265#post27709265

Original comment by dlu...@gmail.com on 21 Jun 2012 at 8:55