set default-directory to nil hangs emacs

[Darren Hoo]

As I stumbled upon bug #15607, I fiddled with this buffer local variable
and found that evaluating
        (setq default-directory nil)
in *scratch* buffer would cause emacs hang forever.

I wonder if it's a bug so I'd ask here first.

How does buffer local variable do the magic in the low level  that  it
automatically becomes permanently buffer-local when set?  Anyone
shedding some light on this would help me find out the cause of
bug #15607 in my environment.