I don't know any better way to escalate this, either. I've already filed a bug report and asked for the state of the bug. I got the same reply like you. 😟
As we use our XServe running Mac OS X Server 10.5.3 also to host a large database which is used for longer-term scientific computing (one calculation is running for about two weeks), it is extremely annoying. We cannot reboot our server nightly, because this would interrupt the computations. Killing the hanging "sshd" processes is not a good idea, either: The "pty" devices which were in use by hanging processes behave a bit like "zombies". When newly initiated "ssh" connections try to get one of these "zombie devices", it leads directly to new hanging "sshd" processes.
Example: Assume that "/dev/ttys001", "/dev/ttys002" and "/dev/ttys003" are occupied by hanging "sshd "processes. To free CPU resources, I kill these three hanging "sshd" processes. After then, for example, the next four newly initiated "ssh" connections are assigned to "/dev/ttys001", "/dev/ttys002", "/dev/ttys003" and "/dev/ttys004". The first three newly forked "sshd" processes will hang also and hog the CPU(s) again, the fourth one will be -most probably- usable.
We are really thinking about investigating how well Linux or FreeBSD will run on our XServe (I have no idea if there are drivers for Apple's FiberChannel controller to connect the XServe RAID)...
It's just sad that Apple needs so long to fix this bug.
Best regards,
Steffen