I'm not a guru at any of this, but I think I can provide a little bit more information.
I turned on Animation Info in the Debug menu. I was watching an individual is having the exact problem I am currently. It shows up on her screen that she's dancing. Everyone else is dancing normally, but she'll suddenly freeze and just stand there awkwardly. I compared the list of animations(It shows them just as a bunch of 0's. I don't know why, but then again I'm not a smart person with this stuff.) and there was a specific one that showed a Priority Level 4 that was there while she was dancing then fell off when she stopped. When the next dance came through the cycle(they're using a synchronized dancing hud) it would start her into the dance just fine but after about 20-30 seconds she'll revert back into the frozen posture.
I don't know what all this translates to, I don't know if there's an issue with the communication between the HUD and client, client and SL server or a mix-up of the three, but that's all I can figure out for now.