> Sounds reasonable I can try to bring the link up with the loop unloaded to
> see if that helps but I still sort of feel possible MTU issues but can't put
> my finger on it.  Some more googling shows that there can be issues if
> path-mtu-discovery and timestamps are enabled at the same time but I don't
> have a tcp timestamps entry in the global config.

This is 99% MTU issue. Do 

show ip bgp nei x.x.x.x | i Data

 on both sides. 

You will get something line this "Datagrams (max data segment is 1460 bytes):"

This is the MSS neighbors negotiated while opening BGP session.

Add 40 byte to it and try to ping  your neighbor with this packet size (with df 
bit to be completely sure). If it fails, lower mtu and reset session.

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