| Is this just an optimization issue (slower code from mipsel compiler), or
 | does the standard mipsel compiler produce broken code (kernel panics)?

Not optimization issue. It's work around for CPU bug.
mipsEEel-netbsd-gcc pad extra nop for short-loop.  But sssembler
source is not fixed, I have added following fix manually.

(locore.S)
1:
#if defined(MIPS3_5900)	/* work around for branch prediction miss. */
	nop
	nop
	nop
#endif
	addu	t2, t2, 1
	and	t1, t0, 1			# bit set?
	beq	t1, zero, 1b
	srl	t0, t0, 1			# try next bit

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UCHIYAMA Yasushi
uch@vnop.net