And virtual 8086 mode is still supported on modern Linux kernels! (Only 32-bit kernels, though. AMD decided to prevent it from being used by a 64-bit kernel.)
v8086 mode, like many aspects of the x86 architecture, is a big mess.
I used DOS/16M extensively on 286 (one specific example was my home Zenith AT at the time, a 80286 at 6MHz with 0 wait states). This was with all but 512K on an Intel AboveBoard in the backplane.
[1] http://www.tenberry.com/dos16m/faq/basics.html#10