you should set a dummy host in your pool list to the local host. This way if everything else is down your local server would respond. You could just do this on one box then point all the rest at it (best on the dhcpd server imho). There is also a config variable "timeout milliseconds" but that might be a compile option. Since your install doesnt have a dummy host sounds like your using debian/ubuntu breed?
and Psi, of course I sees it. I see all!
The machine is running CentOS 5.5, a RH/FC variant.
What is the default timeout? I saw the ntpd hosts in the conf file, all pointing to the same location. So if I changed the last one to localhost it should then progress if it can't reach the other hosts, correct?