FOLKS I have fixed mine...it went fast because I have fiber and well, SSD rocks.
Ok, I booted into my old drive with 10.7.2. via USB
I downloaded the COMBO update via http://support.apple.com/kb/DL1484
I installed the combo and ran Disk Utilty a couple times to make sure nothing obvious was broken or permissions sticky bit was whacked out.
Boots up into 10.7.3 fine.
If I had to guess, I'd say the installer is either got a bad pack for Macbooks here (judging by the comments) or it is quitting prematurely and rebooting before the update is fully completed - which has happened with Snow Leopard in the past on some of my machines.
I'm out of here, I have a Sh*t ton of photo this evening.
Good luck y'all. Apple get your act together.