Comment 3 for bug 877278

You seem to have done a good deal of initial investigation into the cause of the problem - thanks for that!

There is some conflicting information in your report, in that you say recovery mode works but booting with linux_gfx_mode=text does not. The differences between recovery mode and regular mode are:
 - linux_gfx_mode=keep is never set in recovery mode
 - the 'quiet', 'splash', and 'vt.handoff=7' options are not set
 - the 'nomodeset' option is set instead
 - the system is booted straight to the recovery mode menu, without running udev or starting X

The first two of these you've already tested. The third one should have no effect here because you're using the nvidia driver, which doesn't support modesetting anyway. Only the last variable seems to not be accounted for.

Do you have the cryptsetup package installed on this system? What does 'xrandr' show as the list of supported resolutions? After setting GRUB_GFXMODE, do you see the plymouth splash screen, or do you only see X?