The problem was in the "more specific" relation, that didn't pay enough attention to varargs.
The correct behavior is in the spirit of JLS 15.12.2 (as of Java 5):
* a fixed-arity function always wins over a variable-arity functions
* if two vararg functions are compared, their parameters are checked for subtyping.
In the latter case, the candidates may have different number of formal parameters, so we
compare the matching parts and then check the rest against the vararg parameter.
#KT-1835 Fixed
Andrey Breslav