I have spoken with Arfie about this. It turns out that dalnet servers are rejecting the connections from xshellz free servers as they see these connections as a throttle due to being a lot in a few seconds. Eventually my eggdrop connected, but it is likely that the same thing is happening to a lot of people.
If you are experiencing issues like this, please try to connect to koala.dal.net, fidelity.dal.net or agility.dal.net, rather than irc.dal.net. These three servers have slight increases in clone limits specifically for xshellz customers.
If you still experience issues, feel free to ask on DALnet in #operhelp or message me directly.