User account unresponsive
I ended up burning that user. 

There was definitely something something in ~/Library that caused this. I fiddled a bit with deleting more stuff out of ~/Library but didn't narrow down exactly to which setting/app caused it. Finally when ~/Library was half empty, the user started to work. I moved ~/Documents, Downloads, Desktop over to a new account, burned the afflicted and renamed new user back to old name. At least now I know where to start digging next time it occurs.