I think program counter is backed up and branch is just re-executed. Though it's annoying if handler wants to skip over faulting instruction (eg. it was a syscall), as it now needs to emulate the branch behavior in software. Most of the complexity is punted on the software, I think only hardware tweak needed is keeping in-delay-slot flag in fault description, and keeping address of currently executing instruction for fault reporting and PC-relative addressing (which probably could be omitted otherwise, keeping only next instruction address would be enough).