I can confirm that this problem is still existent in 8.10 release.

Trying to connect with a non-mppe client results in:

Nov  4 16:55:36 vpn-test pppd[24480]: sent [LCP TermReq id=0x2 "MPPE
required but peer negotiation failed"]

It is impossible to configure mppe to be optional.

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pppd cannot be configured to enable mppe but not require it
https://bugs.launchpad.net/bugs/88986
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