Now I think the capability is mandatory in new MAIL in LION
I think the new Mail in Lion is respecting the capability command when starts to talk with the server pop.
When mail connects a SMTP 25 server it asks for extended helo (ehlo)
So the server can says its rules, limits so Mail can respect this rules.
When Mail connects an IMAP server is the same.
But now it seems that the new MAIL in Lion when connects a POP server its asks CAPA before send user and password.
If your server is not prepared to answer correct its ask, the connection will not complete.
It's not usual to ask capability in POP connections
First Check out after the connection if your server is answering correct the command CAPA when connected your port 110 POP
# telnet X.X.X.X 110
Trying X.X.X.X...
Connected to X.X.X.X.
Escape character is '^]'.
+OK POP3 Ready X.X.X.X 0001bc8e
CAPA
+OK Capability list follows, mate
Now I think the capability is mandatory in new MAIL in LION