Deliverator
Graphical Hackificator
There was also overlap, where some vertices belonged to 2 groups - and the distortion seems to begin at exactly those vertices that were assigned to the particular problematic bone(s) and no further.
I got to pretty much the same point as you by playing with your Centaur files - it is a good simple example of the problem. It does seem to be do with overlapping vertex groups - but it must be a particular scenario where they cause a issue as some models with overlapping groups work fine.
In the Granny format every vertex can be weighted to up to four bones where the total weight should always 255. The BR2 export script calculates these weightings. I can alter the script so that all the weighting goes to a single bone and see what that does.
Edit: I don't think it can be do with "problem bones" - a bone doesn't really have any properties other than a position, a vector direction and hierarchical connections to other bones. I think it's more like to be the pattern of overlap in the vertex group mappings. Could be wrong of course.