While opening dolphin with no arguments from the terminal works, whenever I try to open dolphin while passing in a specific path it hangs. This occurs regardless of whether I pass it as dolphin /home/user or as dolphin --select /home/user. I believe this is what is preventing xdg-open (and consequently file dialogs in other applications) from working on my system, as I did a bit of a sanity check trying nautilus instead which works fine. I’ve no clue on how to fix this beside looking through strace considering dolphin works fine without arguments, but I wasn’t able to find anything.
This is only a partial answer, and quite frankly more of a hack than a solution imo, but it does seem to fix the issue with xdg-open and other applications file dialogs so 
If you make a copy of the org.kde.dolphin.desktop file, place it within $XDG_DATA_HOME/applications, and edit Exec=dolphin %u to be Exec=dolphin --new-window %u, xdg-open appears to function properly (along with application file dialogs).
This still doesn’t fix the underlying issue however, without that flag dolphin still hangs. Furthermore, upon more inspection from me attempting to solve the problem this wasn’t the only argument that causes dolphin to hang. --daemon also appears to cause dolphin to hang as well.