I use a linksys BEFSX41 at a remote site. The router runs a site-to-site vpn with a third location.

The remote site periodically reestablishes the connection with the local site due to what appear to be a BEFSX41 bug (one of many...) While the BEFSX41 reestablishes the connection it is unable to do anything else so packets going through the router are delayed or lost; the hiccup often lasts 1 to 2 seconds.

I use ssh to connect to servers behind the BEFSX41. That works fine until the BEFSX41 has one of its hiccups; at that time the ssh freezes, the sometimes recovers, sometimes it doesn't.

I also run a pptp server behind the BEFSX41 and connects to it remotely through the BEFSX41. I sometimes run the ssh over the pptp. That makes the problem much more severe. The ssh freezes, however, the pptp remains robust (just with periodic hiccups due the BEFSX41 lousiness)

What configuration settings may be available with ssh (server or client side) to help it work over this unreliable connection?

Sending keepalives should tell SSH the connection is still alive, but in your case with hiccups that short I wonder if it would do anything. I prefer running autossh for tunnelling since it will restart the connection if it dies or stops passing traffic.