For my testvm I followed the exact steps @dalto mentioned before.
However with my testvm after running the last step when generating the grub menu my kernel image wouldn’t show up in the output. So I reinstalled my kernel.
sudo pacman -S linux
Then I ran grub-mkconfig -o /boot/grub/grub.cfg again and my kernel image showed up in the output. When I then rebooted the grub menu show with both firmware and kernel options. Then it booted straight into my system without hanging trying to load the root filesystem. I know dracut-rebuild generates a new initramfs image and fallback image, but maybe reinstalling the “linux” package triggers something more?
Here’s my exact steps just to share my output:
sudo pacman -R kernel-install-for-dracut
sudo pacman -S eos-dracut grub
cat /etc/kernel/cmdline
sudo vim /etc/default/grub
sudo grub-install --target=x86_64-efi --efi-directory=/efi --bootloader-id=EndeavourOS
sudo grub-mkconfig -o /boot/grub/grub.cfg
sudo pacman -S linux
sudo grub-mkconfig -o /boot/grub/grub.cfg
sudo reboot
I know my problem with my testvm is a bit different as in the kernel image not getting recognized by grub but maybe it’s worth a try just to see what happens.