I took the liberty of making additions to the wiki for the Sysupgrade and Preinit and Root Mount and Firstboot Scripts technical references.
Here's another more detailed but still abridged explanation of this bug for any non-believers:
Sysupgrades that preserve volatile files ('sysupgrade -c ...') replace the 0xDEADCODE marker at the rootfs/rootfs_data boundary with the tar bundle of preserved files. The 0xDEADCODE marker is moved to the start of the next erase block.
Upon the subsequent first boot, the mount_root utility reads a valid jffs2 file in the first block of rootfs_data, concludes that the partition has already been formatted, and summons the jffs2 driver. The jffs2 driver finds the 0xDEADCODE marker after the tar file and assumes that now is a safe time to format the rootfs_data partition and launch the jffs2 overlay.
This is a bug, since preinit_main hangs while the jffs2 driver formats the partition, which can cause fatal soft lockups on systems with weak cpu and large rootfs_data partitions. The intended behavior for a first boot is to have mount_root kick off an intermediate tmpfs overlay, deferring the jffs2 switch until the /etc/init.d/done call.