IIRC, Paul Stoffregen not only researched this bug thoroughly but also submitted a fix to the Arduino core that for whatever reason was not adopted. See here.
I too have been bitten by the String bugs. I don't know enough about the topic to comment intelligently re: the motivation of the Arduino team not to take over the proposed changes wholesale, but I do plan to do two things: apply the teensy fixes to malloc, etc. followed by sending Paul a direct contribution.
I hear that serious programmers rely on char arrays and so on instead of Strings, but boy are Strings convenient, easy to use, etc for novices like myself.