How is Darren setting up the Pineapple mesh network with point-to-point links? He demos this in season 15 of the Hak5 show.
I just recently ordered a Mark V to do this (bridging a wifi network over some distance) so I don't have one to test out various things yet.
Are you sure there isn't a channel conflict (wlan0 and wlan1 on same channel)? I'm assuming you'd be using a high-gain directional antenna (panel, yagi, etc) for wlan1 and a dipole on wlan0 for the hotspot. This should help mitigate any intereference.
Have you tried disabling wlan0 and connecting a machine directly to eth0? If that is stable, throw on a switch with 2-3 computers or put up an access point to see if it remains stable.
Failing that, I'd try putting an Alfa AWUS036NHA on usb and see if it stays connected.