Following Gabriel's suggestion, use -traverse and remove -no-hygiene.

src/Makefile

@@ -19,11 +19,7 @@ endif
 # ----------------------------------------------------------------------------
 # Ocamlbuild tool and settings.
 
-# Both targets "library" and "stage1" use "_stage1" as the build directory.
-# This used to be fine with ocamlbuild, but starting with ocamlbuild 4.03,
-# the flag -no-hygiene is required.
-
-OCAMLBUILD := ocamlbuild -classic-display -no-hygiene -j 0 -cflags "-safe-string -bin-annot"
+OCAMLBUILD := ocamlbuild -classic-display -j 0 -cflags "-safe-string -bin-annot"
 
 # ----------------------------------------------------------------------------
 # For everyday development.

src/_tags

@@ -16,3 +16,9 @@
 # Turn off assertions in some modules, where they are useful when debugging, but costly.
 <LRijkstra.*>: noassert
 
+# Declare that our temporary build directories should not be traversed.
+# This is required by ocamlbuild 4.03; it will otherwise complain that
+# these build directories violate its hygiene rules.
+<_build>: -traverse
+<_stage*>: -traverse
+