The problem is that there's no flow control, and the PDP-8 hardware has no buffering.
When you fill the buffer that the TTY driver is managing and handing that data to PIP, then there's nothing to do any kind of flow control to stop the input while PIP is sending that data to the hard drive.
SIMH could handle this gracefully, but it would then be acting differently from the "real" hardware.
Use the paper tape reader - that has a start/stop that allows the data to be read in until the buffer fills, read pauses and doesn't resume until it's ready to read again.
-Rick
Rick Murphy, D. Sc., CISSP-ISSAP, K1MU/4, Annandale VA USA