I wonder if there is a way to restore /dev/system... as you pointed that appears to be the issue. I've ran installtointernal successfully before the last time when it froze. So if the eMMC isn't bricked, I'm assuming the partitions are corrupt. I have access to terminal through TWRP, which may not be as limited as LE.
You should investigate where /dev/dtb is mounted from... And in general what you can reach (mount) on /dev/mmcblk0, when booting from sd...
-TOP