Yes make sure to use the old shell since I'm not sure if C2H is supposed to work with gcc 4.
When you say the BSP is corrupt you just mean it is out of date right? This is expected since you are using software tools that modify your system. It's just like if you generated a BSP and then regenerated your SOPC Builder system with an extra component that you manually added. Using the IDE flow this change to the syslib will be automatically detected and the syslib will get regenerated for you. The SBT tools doesn't perform this automated step (and for good reasons).