Just had some more time to test this. I performed a clean WP install (3.4.1), added a second post, set the posts-per-page setting to 1 and set permalink structure to /%postname%/.
Browsing to an archive page, like <site_url>/2012/08/page/2/, for the 2nd time causes the redirect loop error to appear.
This is a rather obvious bug, so I’m guessing it is connected to a recent change in the code, either in the plugin, or in WP.
