It defies logic really but you read correctly. Until I made the call to the aol.com postmaster last night ALL email sent through smtp.xtra.co.nz was basically being blocked, with very few (and irrelevant) bounces. And it's been like that for at least a week.
As I understand it, that's mail from NZ's largest ISP being blocked by America's largest ISP with no real explanation.
I know there is precedent for this, but if you work with or have sent mail to aol users recently you might want to check for delivery or resend. Oh, they did say it might take 24 hours to take effect so it should be ok by 7pm tonight, 18/05/06, NZDT.