I managed to get it solved. I needed to modify the emmcboot env to following:
emmcboot=run setup; setenv bootargs ${defargs} ${emmcargs} ${setupargs} ${vidargs} bootargs init=/bin/bash; echo Booting from internal eMMC chip...; run emmcdtbload; load mmc 0:1 ${kernel_addr_r} ${boot_file} && bootm ${kernel_addr_r} ${dtbparam}
adding the bootargs init=/bin/bash to the last argument of the setenv commad, before the first ;
This allowed me to boot straight into root shell and using passwd root switch the root password.