First, your serial port should be set for 9600. Go into the ALIX BIOS (press 's' during the memory test) and set the speed to 9600 and set your serial client to match. Try to boot again, if it's still not right, then something must be wrong with the CF or how it was written.
You're sure you decompressed that image first before writing? And you're sure it's disk1?
Usually the command looks more like:
gzcat pfSense-1.2.3-RELEASE-4g-nanobsd.img.gz | dd of=/dev/disk3 bs=16k
It's possible that the CF is defective, but unlikely. If even the first part of the CF was written correctly, you should have gotten the pfSense boot menu with an F1/F2 choice.