I restored a couple apps with Titanium and the processing mode is AUTO, DIrect.
Weird, I tried forcing System Busybox after installing from the market and the restore was still borked... I did however find the menu option under troubleshooting for app processing mode and tried the other two options...only one that worked for me was the third one that interacts liek you are installing an apk manually. Its a PIA but it worked, I will try again when the newer version is released in the future.