Consider
newtype Foo = Foo Int
lift :: (Int -> a) -> Foo -> a
lift f (Foo x) = f x
Now, I'd expect this to compile with -O2 down to something like
lift f = f `cast` (Foo -> a)
but it doesn't.
It seems that GeneralizedNewtypeDeriving assumes that these two things *are* equivalent, and it just directly casts the class dictionary. The implication would be that that GeneralizedNewtypeDeriving gives more efficient instances than you could *possibly* get if you wrote them by hand, which is very sad.