Problem solved. I needed to change a setting:
CMA710>0>15 to CMA710>0>14. It's a timer on the CCIS channel and gives more time for the IPS2000 to wait for an ACM signal (whatever that is) to come back from the SV8500 once the dialed digits were sent. Basically, on international calls, you can't specify the exact amount of maximum digits dialed by CM85, since the number of digits vary country-by-country.

So when you finished dialing, the IPS waits a certain amount of time before it thinks dialing is complete and starts processing the call. When it sends the digits to the 8500, it does the same thing: waits for a certain amount before it starts processing the call. I assume, that's the point when it sends back an ACM signal to the IPS (it must be some sort of acknowledge signal). It appears the problem was that the IPS didn't wait long enough for the ACM signal coming back from the 8500 before it said "well, looks like nobody cares on the other end that I'm trying to send out a call, so I give up" and gave fast busy for the caller even before the 8500 had a chance to look at the digits sent to it by the IPS.

So when I increased the wait time from 15 sec to 28 sec, that was enough, and calls started to go through.

All this, I decoded from the ISMC command of the 8500 monitoring messages for successful domestic calls and unsuccessful international calls, and doing a search for "ACM" on the IPS Command Manual.

Thanks for all your helps.