I just tried Brave Fencer Musashi on 3.80 m33-5 and it still crashed. Tried using a previous Game Save from my PSX MemCard ( Conversion instructions here. ) and it would still crash when I'd try to 'zone' from Grillin' Village to Twinpeak Mountain.
On another note, I used a prior game save to see if Klonoa would work past the 'choke point' just before the boss battle with Joka at the end of Vision 1-2. So far, I've played almost all of the remaining levels with no difficulty at all. (I didn't try the Bonus stage yet because I'm not feeling particularly masochistic today.)
If there's interest, I can try to create a PSP-friendly gamesave post Vision 1-2 and upload it here.
It'll be interesting to see if the 'Official' release of Klonoa on the PSN suffers from the same issue. Maybe they fixed it in 3.90.... Won't know that 'til 3.90 m33! ^^