For some reason, this makes the movement of the mouse pointer very slow and makes it jump from time to time, so I ended up adding INTERRUPT_KEY_SCANNER and disabling the timer interrupt. Also double bufferred the mouse report just like the others. Unfortunately this does not affect this issue.
KDS build environment
This build environment is set up to be used with Kinetis Design Studio. You can simply import the project into KDS by choosing File -> Import... -> General -> Existing Projects into Workspace, then select this directory, and click the Finish button.