I have implemented your algorithm and here's what I found by playing around with the numbers. Note, that this is after commenting out the solvePenetration() method, thereby, transferring all contact resolution to a velocity based system.
1.) The jittering stopped when standing on two inverse mass=0.0f tiles. This was the exact result I was looking for, and by playing with three parameters, the iterations, the "d" and the "k" I was able to come up with a global solution that was stable (of course it's only a 2d game where block stacking is not necessary, therefore, I did not do a full body physics test). But all things considered, it works very well.
2.) A new problem now cropped up. When an AABB with finite mass is "walking" along infinate mass tiles which are placed adjacent to each other (horizontaly), the algo you supplied allows for a little sinking into the existing tile, which means that if I am "walking" right, the bottom right corner of finite mass AABB snags the top left corner of the tile being walked on providing for a rough jerking motion which should be smooth acceleration.
If you have any ideas how to solve this, please let me know. I tried a few hacks, for example turning off gravity when the entity is standing on a mass=0.0f ground, but non of these have proved to adequate for realistic non snagging movement.