I haven't noticed 3.40-OE freeze during joining part members. Not to say it won't, but 3.03, 3.10 would crash when Korcha tried to join, and I could get past that in 3.40-OE.
As far as the boss battles, maybe its akin to a memory leak... Just to try last night, I fought the Hydra where the game would crash every time when it died (as others here have described with boss battles). I used CWCheat to give all characters Max Strength. I defeated the Hydra within the attack by the third party member, so no elements were used and a very short battle -- and it did not crash.
Unfortunately it sucks to continue after that as any other battle at this point is over with one swing of a swallow. Not fun at all.