Simon,
But I think the way to handle it is this. Suppose we have
f x y = ....(f ex (C a b))...
where C is a constructor, and where y is scrutinised by a case expression somewhere in f's body. Then, in this recursive call to f, we know what y will be, and we could save the case in the recursive call. So make a specialised version of f, thus:
fs x a b = let y = C a b in (...original body of f...)
Now add a RULE to f, saying
f x (C a b) ===> fs x a b
This is very much the way type specialisation works. Now every call to f that has a (C a b) argument will benefit. Including the recursive call to f in fs's RHS, so fs will become the self-recursive tight loop you want, leaving f as a sort of 'impedence matcher' for callers elsewhere.
Sounds like a good idea to me :-) Cheers, Manuel