Is it understood from the Prophet's (peace be upon him) saying: "Indeed, Allah does not look at him who drags his garment out of pride" that there is no harm in letting the garment hang low (isbal) without intending arrogance?

The preponderant view is that the prohibition of dragging one's garment is not limited to arrogance (khuyala'), but is absolutely forbidden, though it is more severely prohibited when done out of arrogance. As for Abu Bakr Al-Siddiq (may Allah be pleased with him), he did not intentionally let his lower garment (izar) hang low; rather, it would loosen and fall down due to the weakness of his body after he had raised it above his ankles, and this does not fall under the warning [of punishment]. Drooping (al-isbal) is prohibited, whether it be in the lower garment or anything else. And whoever does so out of arrogance is only deceiving his own foolish self and absolving it.