PIPE on POSIX are implemented using pipe system call so it will have all
the limitations of the system buffering that is used for implementing
pipes. The buffer size is system dependent. For example, on my Linux, I
hit the hang condition at 64K and not 20480 bytes (as is your case).
What basically happens is that the child fills up the pipe buffer and is
blocked until space is available. Since the parent in your test script
is not reading the bytes, space will never be freed up. 

I suggest that the bug is closed as invalid.