I just don't see how you'll be able to use MOVX instruction without a latch connected to P0. Keep in mind that P0 serves as both data port and address port (LSB). Without a latch interface, your data will corrupt your address line. I will be very interested to read the article you mentioned.

I ran into some similar problems before regarding ALE line when I was trying to be "smart" by multiplexing 8-bit data on P0. At the time my assumption was simple - I thought once I stopped using any MOVX instruction, I shall be able to use P0 as a general purpose I/O port. I remember seeing the crazy behavior on ALE. At the end I had to rearrage all my I/O's.

One other thing you have to be concerned of is your emulator (I made this assumption based upon your description). Usually an emulator needs to constantly access XDATA once you hault its operation, which may result this "brief ringing" on ALE. An unconventional external RAM configuration may well upset the emulator. Some emulators may require different jumper settings for P0 and P2 when the target has external RAM.