Since my original write up I have learned the following:
The dealer told me that the 2004 model is the first to be equipped with the
Geolander G900 tires, previous years had a different model tire. This is
the only change to the suspension that he is aware of between the 2003 and
2004 model.

The Maximum tire pressure on the tires is 44psi, so I upped the rear
pressure to 44psi and the fronts to 41. [for towing the manual says 29psi
front, 41psi rear]. I also changed the hitch from a straight one to a "drop
hitch" it is now 1.5" lower than the straight one. The drop hitch is about
4.0" shorter than the "lift hitch" [bent receiver hitch] that I originally
tried. The hitch ball is on a short receiver.
A test drive showed that the lower hitch/ball placement and the higher tire
pressures are an improvement. However still not acceptable. I think the
higher pressure stiffened the tires but not enough and the tread is still
too soft.

I have heard another Forester owner has had good luck with 75-100lbs of
tongue weight. An additional test drive was done after I moved several items
out of the front of the trailer to the back of the Forester. This reduced
the tongue weight to 118lbs [down 35lbs from 153]. The swaying seemed worse
with the lower tongue weight. [This follows the logic I have heard many
times].

Chris Ruf