However, under NetBSD the temporary PATH appears not not to be used
   in locating the executable (second script), with the result that
   the initial script keeps on re-finding itself, and the system
   eventually runs out of file descriptors.

   A bug?

No, two:
	 - `exec' should not cause a file descriptor leak.
	 - the revised $PATH should be used to find the second `script' 
	command (what you reported).

						- Bill