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The insert transaction succeeds on ArcSDE 8.0.2 layers, but the C API function SE_stream_free() returns this:
Error -1010: "The layer extent couldn't be updated."
Calling SE_layer_alter() in SE_stream_free() returns an SE_NO_PERMISSION error if the user modifying the layer is not the owner. The error will not occur if you call SE_layer_alter_extent() instead of SE_layer_alter().
In ArcSDE 8.0.2, call SE_stream_close() before calling SE_stream_free().
This issue was resolved in ArcSDE 8.1.