GHC Panic with O1/O2 when case matching existentials in arrow/proc syntax

Summary

GHC seems to panic when doing case matches on existentials under ArrowChoice/proc syntax with O1/O2. Note that the error does not reproduce with -O0!

Steps to reproduce

I tried to produce the minimal example. I wasn't able to trim it further. The problem does not seem to reproduce if I don't also pack the existential somehow, next to the SBool b or B b constraint.

{-# language Arrows           #-}
{-# language DataKinds        #-}
{-# language GADTs            #-}
{-# language KindSignatures   #-}
{-# language RankNTypes       #-}
{-# language TypeApplications #-}

{-# OPTIONS_GHC -O1 #-}

module Panic where

import Control.Arrow
import Prelude

data SBool (b :: Bool) where
  STrue  :: SBool 'True
  SFalse :: SBool 'False

data Exists i where
  Exists :: SBool b -> i b -> Exists i

dispatchExistsArrow
  :: forall arr i r
   . ArrowChoice arr
  => (forall b. arr (i b) r)
  -> arr (Exists i) r
dispatchExistsArrow arrow = proc exists -> do
  case exists of
    Exists tag inner -> case tag of
      STrue  -> arrow @'True -< inner
      SFalse -> arrow @'False -< inner

It can also be reproduced if we pack a constraint equivalent to the packed SBool b:

{-# language Arrows              #-}
{-# language DataKinds           #-}
{-# language GADTs               #-}
{-# language KindSignatures      #-}
{-# language RankNTypes          #-}
{-# language TypeApplications    #-}

{-# OPTIONS_GHC -O1 #-}

{-# language ScopedTypeVariables #-}
module Panic2 where

import Control.Arrow
import Prelude

data SBool (b :: Bool) where
  STrue  :: SBool 'True
  SFalse :: SBool 'False

class B (b :: Bool) where
  tag :: SBool b

instance B 'True where
  tag = STrue

instance B 'False where
  tag = SFalse

data Exists i where
  Exists :: B b => i b -> Exists i

dispatchExistsArrow
  :: forall arr i r
   . ArrowChoice arr
  => (forall b. arr (i b) r)
  -> arr (Exists i) r
dispatchExistsArrow arrow = proc exists -> do
  case exists of
    Exists (inner :: i b) -> case tag @b of
      STrue  -> arrow @'True -< inner
      SFalse -> arrow @'False -< inner

The error in both cases is

ghc: panic! (the 'impossible' happened)
  (GHC version 8.10.2:
        mkSingleAltCase
  ds_d15E
  [b_aUW, $dB_aUX, ds_d15D]
  Either (i_aUQ b_aUW, ()) (i_aUQ b_aUW, ())
  Call stack:
      CallStack (from HasCallStack):
        callStackDoc, called at compiler/utils/Outputable.hs:1179:37 in ghc:Outputable
        pprPanic, called at compiler/coreSyn/CoreUtils.hs:536:9 in ghc:CoreUtils

Please report this as a GHC bug:  https://www.haskell.org/ghc/reportabug

Expected behavior

Compile for any optimization levels.

Environment

• GHC version used: 8.10.2

Optional:

• Operating System:
• System Architecture: