I finally decoded this issue. I can't believe it. The reason why its not able to load the default font and default cursor was that language specific fonts were missing from the /usr/share/fonts/misc folder. Those are missing because I have '-nls' in my global USE flags.
I had to spin up an Ubuntu 14.04 VM to figure this out...:) This is a packaging bug. nx package on Gentoo should force the 'nls' USE flag on media-fonts/font-misc-misc because without that nxagent is completely broken. I wonder how Xorg and Xvnc are fine without those! May be there is legacy code in nxagent which needs removal...:)
Thanks for all the help everyone! It was a pleasure dealing with you all. I hope the x2go community flourishes more and more everyday! -devsk