Is the part of the U-Boot code that is executed from flash "location independent"? By "location independent" I mean code that can be executed from any address range (in flash) without any modification. The target is MPC85xx.

I don't know the details of the MPC85xx architecture, I'm only familiar with the MPC5200 architecture but I think both cases could be familiar. The U-Boot code running from flash is linker address dependent, so you can not, by example, put an image of U-Boot in a different address that it was linked and jump to it from a smaller boot. It is because you must reassign the GOT and the FIXUP sections in a similar way It's done when U-Boot is relocated in RAM.