Hi Daniel,
as far as I can see the -D option is only a wrapper. It's not an sshd on itself.
See the man page for ssh:
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-D [bind_address:]port
Specifies a local “dynamic” application-level port forwarding. This works by allocating a socket to listen to port on the local side, optionally bound to the specified bind_address. Whenever a connection is made to this port, the connection is forwarded over the secure channel, and the application protocol is then used to determine where to connect to from the remote machine. Currently the SOCKS4 and SOCKS5 protocols are supported, and ssh will act as a SOCKS server. Only root can forward privileged ports. Dynamic port forwardings can also be specified in the configuration file.
IPv6 addresses can be specified by enclosing the address in square brackets. Only the superuser can forward privileged ports. By default, the local port is bound in accordance with the GatewayPorts setting. However, an explicit bind_address may be used to bind the connection to a specific address. The bind_address of “localhost” indicates that the listening port be bound for local use only, while an empty address or ‘*’ indicates that the port should be available from all interfaces.
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Not sure what you are trying to do, but there should be an sshd packet too.
This should then use the users made by "Klibc User Management".