Strangely, I just connected both of the BT3 phones directly to my telco lines and they still don't hang up properly. Very strange.

I also ran the full diagnostic set up (pushing the blue button after powering cycling the system), and when it got to the extension ring test, neither of the BT3 phones rang. When i swapped one of them in place of a ringing BT2 phone, it didn't ring either.