But does it refuse when it doesnt have the blockchain even after it finished loading but still downloading the chain?
No, that's what I was trying to say above.
I got the bitcoind client from git master, and accidentally messed up my blockchain. couldnt get p2pool to work. so i waited for it to sync and then it worked fine.
As far as I understood, p2pool shouldn't work properly while the download is still in progress. It will, however, connect to bitcoind (I tried that a day or two back).