This fixes Trac #7368. The problem was that we were matching
   Bad w ~ f (Bad f)
where (f :: * -> *).  Thta leads to (w ~ Bad f), which is
ill-kinded, but matchExpectedTyConApp was returning the (Bad f)
as the argument type, and that was being used to instanatiate
w in the data constructor type, which is very bad.

The code also becomes simpler and easier to understand, which is
an excellent thing.