After further testing, I’ve found that 3.7.0 will no successfully negotiate dialback connections with other systems also running 3.7.0. These connections also log an error like:
2011.03.04 15:45:53 ServerDialback: OS - Unexpected answer in validation from: ee.washington.edu id: 5b589264 for domain: dragonsdawn.net answer:<stream:features xmlns:stream=“http://etherx.jabber.org/streams”></stream:features>