I just checked this testcase with 5.0 and it is failing.
These are the SQLs that hibernate generates.
Hibernate: insert into orders (CustomerID) values
Hibernate: insert into orders (CustomerID) values
Hibernate: insert into customers (CustomerID) values
Hibernate: update orders set CustomerID=? where OrderID=?
Hibernate: update orders set OrderID=? where OrderID=

That last one is the issue.
It fails in MSSQLServer with the error "cannot update identity column OrderID"
Here is the stacktrace again.
ERROR: HHH000346: Error during managed flush [could not execute statement]
org.hibernate.exception.GenericJDBCException: could not execute statement
at org.hibernate.exception.internal.StandardSQLExceptionConverter.convert(StandardSQLExceptionConverter.java:47)
at org.hibernate.engine.jdbc.spi.SqlExceptionHelper.convert(SqlExceptionHelper.java:111)
at org.hibernate.engine.jdbc.spi.SqlExceptionHelper.convert(SqlExceptionHelper.java:97)
at org.hibernate.engine.jdbc.internal.ResultSetReturnImpl.executeUpdate(ResultSetReturnImpl.java:207)
at org.hibernate.engine.jdbc.batch.internal.NonBatchingBatch.addToBatch(NonBatchingBatch.java:45)
at org.hibernate.persister.collection.OneToManyPersister.writeIndex(OneToManyPersister.java:249)
at org.hibernate.persister.collection.OneToManyPersister.recreate(OneToManyPersister.java:171)
at org.hibernate.action.internal.CollectionRecreateAction.execute(CollectionRecreateAction.java:50)
at org.hibernate.engine.spi.ActionQueue.executeActions(ActionQueue.java:560)
at org.hibernate.engine.spi.ActionQueue.executeActions(ActionQueue.java:434)
at org.hibernate.event.internal.AbstractFlushingEventListener.performExecutions(AbstractFlushingEventListener.java:337)
at org.hibernate.event.internal.DefaultFlushEventListener.onFlush(DefaultFlushEventListener.java:39)
at org.hibernate.internal.SessionImpl.flush(SessionImpl.java:1295)
at org.hibernate.internal.SessionImpl.managedFlush(SessionImpl.java:468)
at org.hibernate.internal.SessionImpl.flushBeforeTransactionCompletion(SessionImpl.java:3135)
at org.hibernate.internal.SessionImpl.beforeTransactionCompletion(SessionImpl.java:2352)
at org.hibernate.engine.jdbc.internal.JdbcCoordinatorImpl.beforeTransactionCompletion(JdbcCoordinatorImpl.java:485)
at org.hibernate.resource.transaction.backend.jdbc.internal.JdbcResourceLocalTransactionCoordinatorImpl.beforeCompletionCallback(JdbcResourceLocalTransactionCoordinatorImpl.java:147)
at org.hibernate.resource.transaction.backend.jdbc.internal.JdbcResourceLocalTransactionCoordinatorImpl.access$100(JdbcResourceLocalTransactionCoordinatorImpl.java:38)
at org.hibernate.resource.transaction.backend.jdbc.internal.JdbcResourceLocalTransactionCoordinatorImpl$TransactionDriverControlImpl.commit(JdbcResourceLocalTransactionCoordinatorImpl.java:231)
at org.hibernate.engine.transaction.internal.TransactionImpl.commit(TransactionImpl.java:65)
at cascadeissue.Main.saveEntities(Main.java:45)
at cascadeissue.Main.main(Main.java:34)
Caused by: java.sql.SQLException: [Macromedia][SQLServer JDBC Driver][SQLServer]Cannot update identity column 'OrderID'.