Hi,
I noted a couple of folks have updated their 2860's to the 3.8.9 firmware from the global site, with general success.
I'm on a standard Openreach/Sky connection, so thought I'd try it too... with the v03 version as it matched my existing modem code. I used the .all version because it is a pain in the butt reprogramming the Sky MER stuff.

However, within minutes, the router reboots itself, and is stuck in a reboot cycle until I pull the WAN connection and downgrade back to 3.8.8.

Anyone have any thoughts? (Relatively new to tinkering with the Draytek, so please bear with me, though I'm not new to living on the bleeding edge of firmware)

some more inputs...I have powered down the box for however long it took to make a cup of tea... (Standard helpdesk troubleshooting step!)
It seems line flips from TRAINING to SHOWTIME then back to TRAINING. If I remain on the DSL Status page, things look good. But if I traverse to the Dashboard page, for example, it panics, and reboots.

Try disconnecting the WAN interfaces temporarily, that should allow you to access the web interface.
Then can you check whether Bandwidth Limit is enabled? If it is, try disabling it temporarily and reconnect the Internet connection, to see if that helps.

BEst solution was to put the official 8.8.9.1 firmware, as that fixed the bug that caused this!

Great I'm glad your router is back to working normally.