I can't reproduce this at all.
The behavior I get is that in step 5 if you press Ctrl+V nothing happens (no delay, no pasting) and if you right click the context menu entry for "Paste" is greyed out (since X released ownership of the selection).
I confirm that I can reproduce the bug using the procedure Lev outlined. If you right-click the context menu, Paste is enabled.
Suggestion: Harold, if you think it'll help, feel free to post an instrumented build that writes to a log file things that may help to track down this bug. I volunteer to run this build, and send in the log whenever a crash occurs.
