Third update: I made it work. I had some space on the drive so I created new
partition for / where I installed F12.
Raid/LVM2 support in F12 upgrade DVD is not completely broken but it
displays errors and warning when it tries to mount/inspect my
raid1 md partitions (I have lvm2 on top of them). Anaconda stops and
restarts md arrays several times. I have about 10 of them and whole this
procedure takes about 15 minutes...
Once F12 was installed the boot process was smooth and no errors or new
warnings were displayed.