How do I make OS X set the terminal title back to the original title when coming back from ssh?

Adding

export PROMPT_COMMAND='echo -ne "\033]0;${USER}@${HOSTNAME}: ${PWD/$HOME/~}\007"'

to my .bash_profile fixed the problem.

It appears as if the string in PROMPT_COMMAND gets executed every time the prompt is displayed. From the man page:

PROMPT_COMMAND

If set, the value is executed as a command prior to issuing each primary prompt.