So, bad news (I guess?): using the provided configuration I created a test case, and everything works fine; no sign of the bug you mentioned, Lyor Goldstein. Maybe you could expand the use case, add more seemingly irrelevant details in the hope that they will, in fact, turn out to be relevant?

Note that I had to infer the content of class ImprovedPhysicalNamingStrategyImpl from an answer to a StackOverflow question linked in your settings, so the first step would probably be to replace that class with your own.

Also, I had to guess the version of the Postgresql JDBC driver you were using; I picked the latest, 42.2.3.

Finally, I had to mess around with the settings to make it work with c3p0: the URL and such should be provided with the hibernate.connection prefix, apparently, and not the jdbc prefix.

The branch: https://github.com/yrodiere/hibernate-test-case-templates/tree/HHH-12641
I used docker to create a postgresql instance:

sudo docker run --name HHH-12641-postgres -e POSTGRES_PASSWORD=c_application_rweb -e POSTGRES_USER=c_application_rweb -p 5432:5432 -d postgres:9.6