Upgraded Tycho to 0.17.0 but it turns out the issue indeed has nothing to do with Tycho - I realized I've tweaked the location properties on Windows in an attempt to prepare to support installation into c:\Program Files post-XP with UAC:
-Dosgi.instance.area=@user.home/Application Data/myapp
-Dosgi.configuration.area=@user.home/Application Data/myapp/.configuration
However moving the osgi.configuration.area out of the installation folder (which defaults to c:\myapp :P) is what causes my p2 problem.