This line seems to have been the culprit for some "no space left on device" errors I was getting. Though my disk space is a touch short, 'df' before, during and after attempted merge showed no cause to the seeming lack of disk space. I goofed around in the ebuild, and it seems that the subject command, or to be more specifc, "cat some-big-file.patch.bz2 | patch -p1" runs out of...well, I guess memory (128 here). Seperating out that cat one-liner into seperate commands (copy out of sandbox protected area, un-bzip and patch with "patch -p1 < some-big-file.patch") works fine, but having the patch cat'd to patch always runs out of space somewhere. My error is easily reproduced, so let me know if you want more data (when my problem was posted to gentoo-users, there were no responses, so I'm assuming its not a common problem).
OK, I'll look into making this less memory-intensive in a future release of our sources. try changing "bzip2 -d" to "bzip2 -d -s" and see if that works.
this shouldn't be an issue any more, due to the new way of handling kernel ebuilds that I am using.