I’ve now updated the Customising UC20 kernel command line arguments document to state the custom kernel command line file needs to be in the top level of the gadget, and also to provide a walk-through of the unsquashfs-based modification process (Customising UC20 kernel command line arguments). Let me know if I can add anything else that might be helpful.
I think it’s also worth moving the Customising UC20 kernel command line doc over to the Ubuntu Core docs.