Seems to me that as long as I leave BT enabled on the Treo, and force the 770 to use the Phone connection, the repairing/network connection goes pretty smoothly in subsequent connections. Its not a perfect solution, but works well enough for casual use.
It appears that if I do not add the 770 as a trusted device, I can reliably use the connection as long as I enter a passcode. You just have to make sure that the 770 is not in the "trusted devices" list on the 650. So far, with this, I can reboot the treo and still have it work as a DUN without needing to re-do the connection setup.
Also, it looks like the 770 discovery mode can be turned on: http://bonte.co.uk/myBlog/?p=118
If this works, then perhaps we can pair from the Treo so that we would not have to enter the bt passcode each time.
Has anyone figured out a way to pair the 770 with a Sprint Treo 650 that DOES NOT require re-entering the passcode every time? I get a good and reliable connection, but having to enter the passcode on both the Treo and 770 every single time is starting to get old.