The problem and the fix:

The Level.UpgradeData.Indices CompoundTag inside Chunk is not being upgraded to the new world height at all in this snapshot. All the keys inside Level.UpgradeData. Indices must have 4 added to them if the chunk is being migrated to the new world height format.

I attached a world zip (new world from 1.7.10) to this report containing a double chest @ (232, 72, 261) that will not upgrade properly if loaded. You may have trouble loading the world due to MC-238056