By way of follow-up:

Adding an OnUpdateError handler is not a viable workaround due to a couple of issues:

1. TIBODataset.UpdateError passes a locally created exception with the same text as the original but stripping out all other properties (specifically, BaseException). This makes it impossible to identify the type of the exception in the handler and respond accordingly.

2. Regardless of the value you assign to UpdateAction in your OnUpdateError handler, once it returns TIB_DataSet.UpdateError will be called and as before it will call HandleInternalException, resulting in the error dialog.

So it's quite broken and it means currently there's no way of handling posting errors.