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EVALUATION
MC says:
This is not, strictly speaking a bug, javac crashes because it cannot complete a subtyping test properly - this problem is called undecidability of subtyping. There are papers about it. If you look close enough, this example is a clone of the example in this paper [1] (see Example 2 in Appendix A). Hence the loop.
There's nothing we can do about this in the short term. Also, this is not a regression. This issue has been there since JDK 5 (when generics have been added). An unfortunate side-effect of wildcards.
[1] - http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.129.6166&rep=rep1&type=pdf
Closing as Will Not Fix