Oh wow. NMI blocked, and presumably other interrupts too? That means the filling a 64K segment with cs: prefixes will lock the CPU completely. IP will wrap around forever, and you have created some kind of infinite sized instruction. That's kind of cool!
Presumably, yeah. If other interrupts weren't blocked, unless PC is somehow saved to be the address of the prefix(es), upon exiting from the interrupt you'd resume from the "wrong" ("incomplete", lacking its prefix) instruction.
