You can do that in vanilla Firefox 3.6 and I'm pretty sure it's worked since at least 2.x

No you can't... I just tried dragging a tab into a window. Doesn't work.

The whole point of tab candy is to fix this deficiency.

Dragging tabs between windows works for me in both Firefox 3.6 and 4.0b3pre, with a clean profile (no extensions). You have to drop the tab into the tab bar area (just like Chrome 5 - I don't know if other versions of Chrome are different).

Chrome allows you to drag a tab out of a window into a blank space to create a new window.

Yup. So does Firefox. (And Opera, for that matter... Chrome did not invent these features.)

The shipping version of Firefox when Chrome was first released absolutely did not have this feature. It was a regular pain in my ass. The ability to poof a tab out into a new window without reloading the contents was added to Firefox in the interim.

That's correct. Tear-off tabs were added to Firefox in version 3.5, which was released several months after Chrome 1.0.

It only works if you're dragging a tab into another tab area.

You can't drag a tab into window without tabs (only 1 tab hence no tab area). You also cannot drag a window (only 1 tab) into another window.

FF does have some subset of Chrome's functionality, but you cannot use it like Tab Candy to easily organize sets of tabs. Which is the whole point of the post.

Firefox and Chrome have the exact same functionality here, unless you turn off "Always show the tab bar" in the Firefox prefs. (It is turned on by default in Firefox 3.5 and later.)