XMPP transports do not report bad credentials properly
Facebook, Google Talk, XMPP, et al report success on bad credentials when registering. I'm not entirely sure they bother to report a disconnection/failure to the user in general.
Done – there's a few other tweaks I need to make related to it but another issue addresses those.
I can confirm that it IS reporting a disconnection or failure back to the user. I say this because I see it periodically when jabber.org and gtalk have minor server issues and DC me. =)
The primary thing I'm going to investigate from this issue is that I am doing the registration right. (ie, you pass the wrong password during registration, it immediately fails – does not feign success)