I booted a xenial guest as shown in my comment 10, added -proposed and rebooted into overlayfs
ubuntu@sm-y1:~$ uname -r 4.4.0-38-generic ubuntu@sm-y1:~$ dpkg -S /boot/vmlinuz-4.4.0-38-generic linux-image-4.4.0-38-generic: /boot/vmlinuz-4.4.0-38-generic
$ grep overlayroot /proc/mounts overlayroot / overlayfs rw,relatime,lowerdir=/media/root-ro,upperdir=/media/root-rw//overlay,workdir=/media/root-rw//overlay-workdir 0 0
$ sudo apt-key add my.pubkey OK
So xenial looks good to me.
I booted a xenial guest as shown in my comment 10, added -proposed and rebooted into overlayfs
ubuntu@sm-y1:~$ uname -r 4.4.0-38- generic 4.4.0-38- generic: /boot/vmlinuz- 4.4.0-38- generic
4.4.0-38-generic
ubuntu@sm-y1:~$ dpkg -S /boot/vmlinuz-
linux-image-
$ grep overlayroot /proc/mounts lowerdir= /media/ root-ro, upperdir= /media/ root-rw/ /overlay, workdir= /media/ root-rw/ /overlay- workdir 0 0
overlayroot / overlayfs rw,relatime,
$ sudo apt-key add my.pubkey
OK
So xenial looks good to me.