at the .set mips16 line, press Alt-G, choose mips16 and set the value to 0.
Press Ctrl-G to display the list of segment register changepoints, pick the mips16 list and delete the wrong entries with value of 1.
Note: it's best that there are no existing instructions at the addresses where you change the mips16 pseudoregister value, so it is ...
Ghidra was the way to go, no other reverse engineering software had 64 bit MIPS. Reko came close and when I mailed that team they said they would implement it in the coming days. IDA only disassembles partly and cant decompile. Ret from Avast 32 bit only as well. Once JDK 11 was installed disassembled and decompiled the .o elf easily. There is some problem ...
Mumbel is correct, Ghidra supports decompilation of MIPS64 binaries; see "What Processors are Currently Supported" in their FAQ.
Here is a screenshot of decompilation of the main() function of readelf compiled to target MIPS64 architecture: