I am pretty sure that RFC 4959 section “4. Examples”, second example tells you, that your IMAP server offering AUTH=PLAIN _MUST_ support it. Now, this is what happens when you try it with a MobileMe Mail account:
* OK iSCREAM ready to rumble (1F28:18179)
* CAPABILITY st11p00mm-iscream001.me.com 1F28 XAPPLEPUSHSERVICE IMAP4 IMAP4rev1 SASL-IR AUTH=ATOKEN AUTH=PLAIN
R00001 OK !!
R00002 AUTHENTICATE PLAIN
R00002 BAD Parse Error
BAD Parse Error
Fucked up, isn’t it?
EDIT: Turns out to be a general problem as media reports about problems after MobileMe > iCloud migration.
UPDATE:Apple has fixes this issue a few weeks ago.