GHC 8.2.1 picks wrong instances with -O in a presence of an OVERLAPPABLE instance

We experienced code breakage while moving to 8.2.1 - in some circumstances it picks wrong instances if an instance in the lines of instance {-# OVERLAPPABLE #-} C a is defined. @s9gf4ult was really nice to create a repo demonstrating an issue, you can look at the repo here: https://github.com/s9gf4ult/isogen-minimal-example

Running chech.sh will trigger three builds:

GHC 8.0.2, -O, succeeds
GHC 8.2.1, -O0, succeeds
GHC 8.2.1, -O, fails

If you'll check out to either of fix- branches:

fix-move-to_string
fix-no-catchall-instance
fix-replace-to_string
fix-add-irrelevant-instance

then the last test should succeed also. Those branches contain changes over master which fix the application behavior in different ways.