The main description is in Note [Preventing recursive dictionaries]
in TcRnTypes, which applies only to Coercible dictionaries.

But it was a bit of a mess:
 - It wasn't applied consistently
 - It was being applied to non-Coercible dictionaries in some places

This patch tidies it up.

This hack will largely go away when Richard starts treating Coercible
constraints more like equalities than like dictionaries.