To narrow this down the change in return value seems to have appeared between libvirt version 1.3.4 and 1.3.5, and looking through the git logs commit d218344e6c1afce5788d7f72b78859219c50a3de could be a suspect:

commit d218344e6c1afce5788d7f72b78859219c50a3de
Author: Eric Blake <eblake>
Date:   Mon Mar 14 14:30:24 2011 -0600

    virsh: optimize creation of default connection
    
    Ramon de Carvalho Valle reported a problem with:
    virsh connect qemu:///system
    as a non-root user.  The real root problem appears to be a regression
    in libvirtd being auto-started on the default qemu:///session URI;
    however, the symptom points to an independent flaw in virsh - we
    shouldn't be wasting efforts on making a connection if we aren't going
    to be using that connection.  Fixing virsh avoids Ramon's issue, while
    I work in the meantime to fix the real libvirtd regression.
    
    This patch looks big, but that's because 'gcc -Wmissing-field-initializers'
    gets triggered by './autobuild.sh --enable-compile-warnings=error', so I
    had to add 0 initialization to everyone (rather than my preference of
    just adding the non-zero flags to virshCmds and to cmdConnect).
    
    Meanwhile, if you use 'virsh -c URI', the connection must succeed; this
    patch _only_ optimizes the default connection to be deferred to a later
    point where we know if a particular command to be run needs a connection.
    
    * tools/virsh.c (VSH_CMD_FLAG_NOCONNECT): New flag.
    (vshCmdDef): Add new flags field.
    (vshCommandRun): Honor new flag.
    (domManagementCmds, domMonitoringCmds, storagePoolCmds)
    (storageVolCmds, networkCmds, nodedevCmds, ifaceCmds)
    (nwfilterCmds, secretCmds, virshCmds, snapshotCmds)
    (hostAndHypervisorCmds): Populate new field.
    (vshReconnect): Don't warn on initial connection.


As this suggests, running virsh with a non-default connection using the -c argument does indeed yield the expected results:

# virsh -c qemu:///system; echo $?
error: failed to connect to the hypervisor
error: Failed to connect socket to '/var/run/libvirt/libvirt-sock': No such file or directory
1
# virsh connect; echo $?
error: failed to connect to the hypervisor

0
# virsh -v
1.3.5

'git bisect' points to:
commit 0c56d94318393a8295cc0613abb6097a6fd60002

    tools: Fix connect command

git describe: v1.3.4-2-g0c56d94 contains: v1.3.5-rc1~505

Fixed upstream with v2.1.0-rc1-33-gff498a9ac70a:

commit ff498a9ac70a550bed08233a86e00a4faf12aecf
Author: Martin Kletzander <mkletzan>
Date:   Fri Jul 29 08:09:22 2016 +0200

    virsh: Report error when explicit connection fails

Reproduced with libvirt-2.0.0-2.el7.x86_64.
Steps are as comment 0.

Verified pass with libvirt-2.0.0-4.el7.x86_64.
Test steps:
1.$virsh connect abcd
 error: failed to connect to the hypervisor
 error: no connection driver available for abcd

2.Check the return value:
  $echo $?
   1

3.$virsh connect abcd --readonly
 error: failed to connect to the hypervisor
 error: no connection driver available for abcd

4.Check the return value:
  $echo $?
   1

5.$virsh connect qemu:///session

6.Check the return value:
 $echo $?
   0

7.$virsh connnect


8.Check the return value:
 $echo $?
 0

9.$virsh "connect abcd; connect; uri"
error: failed to connect to the hypervisor
error: no connection driver available for abcd


qemu:///session

10.Check the return value:
$echo $?
0

Since the problem described in this bug report should be
resolved in a recent advisory, it has been closed with a
resolution of ERRATA.

For information on the advisory, and where to find the updated
files, follow the link below.

If the solution does not work for you, open a new bug report.

https://rhn.redhat.com/errata/RHSA-2016-2577.html