Screen locking issue (with /etc/crypttab keyscript)

[Blah Blah]

What steps will reproduce the problem?
1. Setup keyscript with anything that echos keypresses (like keyscript below)
2. Point to keyscript in /etc/crypttab (SEE /ETC/CRYPTTAB BELOW)
3. Update-initramfs -u and restart (/boot partition mounted from a USB drive)

What is the expected output? What do you see instead?
The first script execution may work smoothly with slight keyboard response hickups. However, on subsequent executions from a soft reboot or cold restart (e.g. if you restart via CTRL+ALT+DEL during the script), keyboard response is no longer granted. The keyscript provided is only to test keyboard response reliability here for ease. My actual keyscript is different. Off course, I would like a solid keyboard response.

What version of the product are you using? On what operating system?
OS - UBUNTU 12.04
{ Description: Ubuntu 12.04.2 LTS
Release: 12.04 }
CRYPTSETUP - 1.4.1

Please provide any additional information below.
Purpose: keyboard response is needed to input passphrase which unlocks a luks encrypted volume on a USB keydrive (removable in order to prevent "maid attack" to prevent someone from simply substituting a toyed boot partition to capture passphrase on next reentry)). Unlocking the luks encrypted volume then allows pass of a keyfile to HDD luks volume holding OS in a lvm logical volume (would like both passphrase and physically removable keyfile with boot partition required to unlock system encryption). I have gotten everything to work so far except for the reliability in the keyboard response. Your help, advice, or any toeing would be greatly appreciated as I have been struggling with the reliability resolution for about a week.

CONFIGURATIONS:

Computer:
Toshiba Satellite Laptop L775-S7248

`uname -a`:
Linux ZaFu 3.5.0-23-generic #35~precise1-Ubuntu SMP Fri Jan 25 17:15:33 UTC 2013 i686 i686 i386 GNU/Linux

/etc/initramfs-tools/modules:
aes-i586
dm-crypt
dm-mod
sha256
sd_mod
scsi_mod
usb-storage
ehci_pci
usb_core
usb_common
xhci_hcd
uhci_hcd
ehci_hcd
ohci_hcd
usbhid
hid_generic

/etc/crypttab:
pvcrypt /dev/sda2 key.iso luks,keyscript=/usr/local/sbin/cpboot

KEYSCRIPT:

#!/bin/sh
# sleep used to give time to shift to "console" (?) screen to view stderr
#+ since keyboard will be taken over by script
sleep 5
password=
echo "TYPE:" >&2
while true; do
        stty -icanon -echo
        char=`dd bs=1 count=1 2>/dev/null`
        stty icanon echo
        case $char in
        '') break ;;
        *)echo -n '*' >&2 ;;
        esac
        password=$password$char
done

echo $password

***I've contacted cryptsetup already and they said any issue here is not on their side***
"""
Handling od /etc/crypttab is not part of upstream cryptsetup (it is processed either by initcripts or systemd generator helper - depends on distro).
(And this init sequence should ensure that keyborard is ready before reading input. If you see it here I think the same problem must be in base distro scripts.)

So please report this to distro bugzilla (launchpad for Ubuntu), I cannot do anything here - the code running keyscript is not part of upstream codebase.
"""

ProblemType: Bug
DistroRelease: Ubuntu 12.04
Package: gnome-screensaver 3.4.1-0ubuntu1
ProcVersionSignature: Ubuntu 3.5.0-23.35~precise1-generic 3.5.7.2
Uname: Linux 3.5.0-23-generic i686
ApportVersion: 2.0.1-0ubuntu17.1
Architecture: i386
Date: Wed Mar 20 21:14:01 2013
GnomeSessionIdleInhibited: No
GnomeSessionInhibitors: None
GsettingsGnomeSession:
 org.gnome.desktop.session idle-delay uint32 600
 org.gnome.desktop.session session-name 'ubuntu'
InstallationMedia: Ubuntu 12.04.2 LTS "Precise Pangolin" - Release i386 (20130213)
MarkForUpload: True
ProcEnviron:
 TERM=xterm
 PATH=(custom, no user)
 LANG=en_US.UTF-8
 SHELL=/bin/bash
SourcePackage: gnome-screensaver
Symptom: security
Title: Screen locking issue
UpgradeStatus: No upgrade log present (probably fresh install)
WindowManager: No value set for `/desktop/gnome/session/required_components/windowmanager'