--mysqld=mysqld_safe

The server run didn't know the correct section to read in a
configuration file, and would read from "[mysqld]" even though
mysqld_multi had already read the defaults and made them into explicit
parameters. 

Worse, the "defaults-file" parameter says that it means "Read only
this configuration file, do not read the standard system-wide and
user-specific files", which should apply not only to mysql-multi, but
to the server also.

So, now if "defaults-file" is given, put "no-defaults" before all the
explicit parameters we read from the defaults-file and feed to the
mysqld or mysqld_safe.