dir appears to be copied into from tbuf at some point. It puts dir-1 into memory location 8 at the start, and then the code around the 2: section I'm pretty sure is a memcpy-ish loop like:
c1 = -8;
*9 = tbuf - 1;
do {
*(++(*8)) = *(++(*9));
} while(++c1 != 0);
goto 1b; // b for backwards?
It seems that memory locations 8-15 are auto-indexing[0], so the lac/dac i increments the pointed-at location before use, and isz is "increment and skip next instruction if zero".
I think ‘dotdot’ is what is called ‘dd’ there (the corresponding symbol in ls is still named ‘dd'). I don't think the concept of a parent directory existed yet. Maybe ‘pd’ is something like ‘prepare directory’, constructing the dd/dotdot entry.
But the program appears to fail if dotdot can't be opened for reading, and it appears to scan through it doing reads first. Then it closes and does a creat, which is expected to succeed also. I'm suspecting that at this stage of development, open may have been used for reading and creat for writing (including to an existing file).
From TFS¹, creat() on an existing file truncates it (i.e. to length zero, as O_TRUNC), and only the superuser can do this to a directory. open() has read/write flag bits as now.
I am leaning toward Pete_D's ‘pack directory’ idea.