Version:            (using KDE KDE 3.5.3)
Installed from:    Compiled From Sources

this pam config: 

=== Cut ===
#%PAM-1.0
auth     sufficient     pam_ssh.so
auth     include        common-auth
account  include        common-account
password include        common-password
session  required       pam_ssh.so
session  include        common-session
session  required       pam_devperm.so
session  required       pam_resmgr.so
=== Cut ===

and logging in without correct ssh passphrase, it continues to log in. this is due to kdm ignoring error exit code of pam_open_session. though I can't come up with a concrete case, this could become a security issue.