I think it's OK... must be an artifact of the PS/2 to USB adapter I am using. Tried every keyboard that I have and only the SIIG (which is a USB board) actually worked correctly. All of the PS/2 boards worked the same way - when I tried it again, hitting the "pause" key on any of the PS/2 boards would cause scrolling output on xev of repeated presses of the pause key, only hitting another key would stop it.
It did nothing on booting, and your method of looking at the USB bus didn't work for me - not sure what I was doing wrong, but I just got an error when I tried tcpdump. But since I got the same behavior on three different keyboards I am guessing that it's not the board that is at fault.
Now, I don't particularly have any problem with the pause key not being functional, since it's damn near useless anyway, but what's the current recommend for a "best" PS/2 to USB adapter? I'm using a Ziotek adapter that I either got from clickykeyboards or Amazon (got my first one from CKB, then bought a couple more as an add-on to an Amazon order, as none of my current machines have a native PS/2 port - and even my new work computer's docking station now omits the PS/2 port. Whiskey Tango Foxtrot? I know USB is more "modern" but it's actually more limited as an interface to keyboards... (yes, I know that my Model M doesn't have NKRO, but what if I were using something that did?)