Rich Freeman had the right clue. Some time ago, after successfully installing zfs, I changed root's umask to 0027. This had the effect of changing the permissions on /lib/modules/X.Y.Z-gentoo to drwxr-x--- on a subsequent kernel upgrade. This prevents emerge (once it switches to user:group portage:portage) from being able to explore the contents of /lib/modules/X.Y.Z-gentoo. Unfortunately for me, spl's configure script locates the current kernel source by following the /lib/modules/X.Y.Z-gentoo/build soft link. And it couldn't do that with the overly restrictive umask. The solution was simple: eliminate the 0027 umask for root, and chmod o+rx /lib/modules/X.Y.Z-gentoo.
Thanks for all the suggestions. They all helped. John Blinka
