It seems that there is a permission issue with the way the filesystem works on metarouter ... dnsmasq switches to the 'nobody' user once it gets going, and after that it doesn't seem to be able to access anything on the filesystem.
Note: this is on the Mikrotik provided image, but it's consistent on more recent OpenWRT builds.Jan 1 00:01:03 dnsmasq: failed to access /tmp/resolv.conf.auto: Permission denied
Jan 1 00:01:03 dnsmasq: failed to load names from /etc/hosts: Permission denied
Jan 1 00:01:03 dnsmasq-dhcp: failed to read /etc/ethers: Permission denied
My immediate assumption is that it is a limitation of the metafs, /tmp/resolv.conf.auto is on a tmpfs, but the mountpoint /tmp is still on the metafs so it may still be a factor. My guess is that metafs (or rather the backend of it) only supports root access to files.
For dnsmasq you can work around it with a "user=root" in /etc/dnsmasq.conf ... but there are going to be quite a few things like this, so it really needs to be fixed.
As a side question ... I'm not sure how the backend works, but is there a way from routeros to get at the metarouter files? It would be nice to have some way of backing them up without having to do it from the metarouter.