Anyone come across this strange error?
Yes, I have, and it's a pain to fix. This is your problem:
Disk is partitioned and formatted with the standard 3.1 ROM version of FFS and is setup as DC-FFS.
Do not use Directory Caching on hard drives! It provides no benefit and (I forget most of the techy details) if it goes wrong, the validation procedure takes longer and more memory. This results in the crash you have been experiencing.
I can't remember how I fixed mine. I think it involved booting with no startup-sequence and running DiskSalv so it locked the hard drive before the validation procedure crashed. Then you can use DiskSalv's validate option to fix the disk (maybe get DiskSalv on a bootable disk instead if the validate crashes too quickly?)
Next step is to use ReOrg to convert the filesystem to plain FFS International. Using ReOrg may also help if DiskSalv doesn't validate the disk.
Chris