Well, at least it appears I'm not the only one in Update 16 hell :)
Apparently, there is a fix to this, but you have to be a Wine expert to actually perform the operation. And, I'm sorry, but I'm no wine expert.
All Wine users are experiencing the same fatal error as of Update 16, and being shut out of the game. However, it appears that they have a strong, lively and bright community to back them up.
Looks like this same thing happened when turbine did an update to Lord of the Rings not very long ago, and someone created a patch for Wine to make it work with the game, again. Users have been applying this patch to their Wine installations, and are getting back into DDO in spite of Update 16. This is the fix we need, but how we are supposed to get it is beyond my capabilities.