Can someone tell me why chdk cant be made to work on the fat32 partitions instead of fat12/16?? or if theres any work being done in making this possible? The SD Cards will only get larger and larger, and fat16 is fast becoming obsolete. There has to be an easier way 
The canon firmware is what loads CHDK, and it only loads DISKBOOT.BIN under certain conditions
1) the card is locked
2)
the card is formatted FAT163) the card has the BOOTDISK string written at the correct location.
Since this happens before CHDK is loaded, there is nothing CHDK can do to change this. Be thankful that canon left the ability to boot form disk in at all, they didn't have to!
On all cameras except the SX1, you can also load CHDK manually, from any size card, using the "firm update" menu (note, this
does not actually update the firmware, it just load it that one time). "firm update" loading is probably fixable on the SX1, but would be very difficult for a developer to do without the camera.
As an alternative solution, I'd suggest getting one or more 4GB cards, formatting them FAT16, and preparing them with CHDK.