> Could you try the following patch?

Yep that seems to solve the LCP problem (see log below).

Again I had a TCP session hang with data stuck in Send-Q - there had
been no silo overflows reported so presumably no lost ACKs, but
despite being able to ping the remote host, the data sat there until
the remote host dropped the session (about 10 minutes later).

As for pppd:

/etc/ppp/options says:
mru 296
modem
crtscts
lcp-echo-interval 300
lcp-echo-failure 6

And here's the log.  Looks ok to me.

Mar  5 02:01:08 zen pppd[1905]: Connected...
Mar  5 02:01:09 zen pppd[1905]: Using interface ppp0
Mar  5 02:01:10 zen pppd[1905]: Connect: ppp0 <--> /dev/tty01
Mar  5 02:01:10 zen pppd[1905]: sent [LCP ConfReq id=0x1 <mru 296> <magic 0x2f58ebd4> <pcomp> <accomp>]
Mar  5 02:01:13 zen pppd[1905]: sent [LCP ConfReq id=0x1 <mru 296> <magic 0x2f58ebd4> <pcomp> <accomp>]
Mar  5 02:01:13 zen pppd[1905]: rcvd [LCP ConfReq id=0x1 <mru 296> <asyncmap 0xffffffff> <magic 0x5d6691e3> <pcomp> <accomp>]
Mar  5 02:01:13 zen pppd[1905]: lcp_reqci: rcvd MRU
Mar  5 02:01:13 zen pppd[1905]: (296)
Mar  5 02:01:13 zen pppd[1905]:  (ACK)
Mar  5 02:01:13 zen pppd[1905]: lcp_reqci: rcvd ASYNCMAP
Mar  5 02:01:13 zen pppd[1905]: (ffffffff)
Mar  5 02:01:13 zen pppd[1905]:  (ACK)
Mar  5 02:01:13 zen pppd[1905]: lcp_reqci: rcvd MAGICNUMBER
Mar  5 02:01:13 zen pppd[1905]: (5d6691e3)
Mar  5 02:01:13 zen pppd[1905]:  (ACK)
Mar  5 02:01:13 zen pppd[1905]: lcp_reqci: rcvd PCOMPRESSION
Mar  5 02:01:13 zen pppd[1905]:  (ACK)
Mar  5 02:01:13 zen pppd[1905]: lcp_reqci: rcvd ACCOMPRESSION
Mar  5 02:01:13 zen pppd[1905]:  (ACK)
Mar  5 02:01:13 zen pppd[1905]: lcp_reqci: returning CONFACK.
Mar  5 02:01:13 zen pppd[1905]: sent [LCP ConfAck id=0x1 <mru 296> <asyncmap 0xffffffff> <magic 0x5d6691e3> <pcomp> <accomp>]
Mar  5 02:01:13 zen pppd[1905]: rcvd [LCP ConfAck id=0x1 <mru 296> <magic 0x2f58ebd4> <pcomp> <accomp>]
Mar  5 02:01:13 zen pppd[1905]: sent [LCP EchoReq id=0x0 2f 58 eb d4]
Mar  5 02:01:13 zen pppd[1905]: sent [IPCP ConfReq id=0x1 <addr 192.168.42.164> <compress VJ 0f 01>]
Mar  5 02:01:14 zen pppd[1905]: rcvd [LCP EchoRep id=0x0 5d 66 91 e3]
Mar  5 02:01:14 zen pppd[1905]: rcvd [IPCP ConfAck id=0x1 <addr 192.168.42.164> <compress VJ 0f 01>]
Mar  5 02:01:16 zen pppd[1905]: sent [IPCP ConfReq id=0xff <addr 192.168.42.164> <compress VJ 0f 01>]
Mar  5 02:01:16 zen pppd[1905]: rcvd [IPCP ConfReq id=0x1 <addr 192.168.42.165> <compress VJ 0f 01>]
Mar  5 02:01:16 zen pppd[1905]: sent [IPCP ConfAck id=0x1 <addr 192.168.42.165> <compress VJ 0f 01>]
Mar  5 02:01:17 zen pppd[1905]: rcvd [IPCP ConfAck id=0xff <addr 192.168.42.164> <compress VJ 0f 01>]
Mar  5 02:01:17 zen pppd[1905]: local  IP address 192.168.42.164
Mar  5 02:01:17 zen pppd[1905]: remote IP address 192.168.42.165
Mar  5 02:06:13 zen pppd[1905]: sent [LCP EchoReq id=0x1 2f 58 eb d4]
Mar  5 02:06:13 zen pppd[1905]: rcvd [LCP EchoRep id=0x1 5d 66 91 e3]
Mar  5 02:11:13 zen pppd[1905]: sent [LCP EchoReq id=0x2 2f 58 eb d4]
Mar  5 02:11:13 zen pppd[1905]: rcvd [LCP EchoRep id=0x2 5d 66 91 e3]
Mar  5 02:16:13 zen pppd[1905]: sent [LCP EchoReq id=0x3 2f 58 eb d4]
Mar  5 02:16:13 zen pppd[1905]: rcvd [LCP EchoRep id=0x3 5d 66 91 e3]
Mar  5 02:21:13 zen pppd[1905]: sent [LCP EchoReq id=0x4 2f 58 eb d4]
Mar  5 02:21:13 zen pppd[1905]: rcvd [LCP EchoRep id=0x4 5d 66 91 e3]
Mar  5 02:26:13 zen pppd[1905]: sent [LCP EchoReq id=0x5 2f 58 eb d4]
Mar  5 02:26:13 zen pppd[1905]: rcvd [LCP EchoRep id=0x5 5d 66 91 e3]
Mar  5 02:31:13 zen pppd[1905]: sent [LCP EchoReq id=0x6 2f 58 eb d4]
...
...
At about this point I ran (sleep 14400; kill 1905) and went to bed...
...
Mar  5 06:26:13 zen pppd[1905]: sent [LCP EchoReq id=0x35 2f 58 eb d4]
Mar  5 06:26:13 zen pppd[1905]: rcvd [LCP EchoRep id=0x35 5d 66 91 e3]
Mar  5 06:31:13 zen pppd[1905]: sent [LCP EchoReq id=0x36 2f 58 eb d4]
Mar  5 06:31:13 zen pppd[1905]: rcvd [LCP EchoRep id=0x36 5d 66 91 e3]
Mar  5 06:34:58 zen pppd[1905]: Terminating link.
Mar  5 06:34:58 zen pppd[1905]: sent [LCP TermReq id=0x2]
Mar  5 06:34:59 zen pppd[1905]: rcvd [LCP TermAck id=0x2]
Mar  5 06:34:59 zen pppd[1905]: Connection terminated.
Mar  5 06:34:59 zen pppd[1905]: Exit.