This is caused by a change in glibc. An explanation of the hows and whys can be found here:
http://www.patoche.org/LTT/kernel/00000172.htmlNotably, the latest stock kernel for RH7.2 does NOT support UNIX98 ptys so you will have to recompile.
After making the changes outlined in that document, booting your new kernel etc, download the newest version of openssh for RH7.2 from ftp.redhat.com. (Include ALL of the related packages, openssh* in practice) Put them in a separate directory for easier handling.
You will probably have a difficult time installing them, especially if you have tried recompiling, reinstalling and generally messing around with openssh. First, carefully try to uninstall any and all installed versions of openssh. You probably will not be able to uninstall them all.
Then, do an "rpm -Uvh * --nodeps --force" to hammer in the RPM packages you just downloaded. Note that this WILL override things in a very dangerous manner, and this may cause things to break. Still... things didn't work when you started, right?
Anyway, this worked for me. Don't shoot me if it ruins your life. Good luck :-)