I have tracked down the SIGCHLD issue.  RHEL3 short-circuits signal delivery for
signals who's default is SIG_IGN. 

__group_send_sig_info() 
...
	if (sig_kernel_ignore(sig) &&
			p->sighand->action[sig-1].sa.sa_handler == SIG_DFL) {
		rm_from_queue(sigmask(sig), &p->signal->shared_pending);
		return 0;
	}
...


By adding a no-op signal handler for SIGCHLD, I was able to get the expected 
behavior on RHEL3 & 4.  I'll investigate the possiblity of modifying RHEL3 to
behave like RHEL4, but the RHEL3 behaviour is arguably correct.  

Further digging (and close reading of 'man sigwait') points this out:


       sigwait suspends the calling thread until one of the signals in set is
       delivered to the calling thread. It then stores the number of the sig-
       nal received in the location pointed to by sig and returns. The signals
       in  set must be **blocked and not ignored on entrance to sigwait.**  If 
      
       the delivered signal has a signal handler function attached, that  
       function is not called.


The customer's test program does not install any sort of signal handler for
SIGCHLD.  The default disposition of SIGCHLD is SIG_IGN, so the signal is
implicitly ignored.