Alright, I've found the bug with the above code (the callback function itself doesn't return true or false; only the anonymous method inside it does), and corrected it. However I've since stumbled upon another problem; if any field uses a callback method to determine required status, but *also* happens to use a custom validation method, it will always be flagged as required.
I've augmented my demo at http://www.kapowaz.net/files/conditional-validation.html to demonstrate this problem in action. Might this be a bug within the plugin itself, or am I doing something else wrong?