> I seem to recall seeing that problem when I was on a dialup PPP account.

Yes, it happens for all interfaces not doing ARP. Before we had the kernel
based ARP auto-magic, we used to wire such routes in /etc/rc.

Their is no real problem: either you have a static address and can hardwire
this loopback route, or you don't care (most user of dynamic IP probably),
or you can add it in the ip-up script (like the defaultroute).

Martin