All this makes perfect sense to me!  The ICD mode operates by running
a special version of the code which contains "hooks" to the debug code
(loaded at the end of memory) which in turn handshakes with the ICD/
programming interface.  Or is it a CONFIG option (single-step interrupt
mode set)?

  If it can't handshake with that interface, it naturally hangs trying
to do so.  To operate *without* the ICD interface, you have to compile a
version of the code without the "hooks" *and* re-program the chip with
that *different* code.

  Verification fails presumably because the "talker" (to borrow the
Motorola term) code at the top of program memory is added from a
separate source during programming.  That is indeed avoided by not
verifying (or re-programming) the section of memory containing the
interrupt server.
--
  Cheers,
        Paul B.