Would it make more sense to move this from being part of the icon in the top bar, where users can tap to see what state the app is in?

I know at one point in the past someone mentioned reducing the amount of moving things (in general, not just this loading indicator).

I think these connect messages were originally shown there, but people were getting confused about what was actually happening, so I may just be saying to return to how it was before and we'll get the same sort of request to add more information.

I think the toasts are more obtrusive then how it is now. We could return to putting a spinner in the appbar like @nichwall is saying without having text anywhere saying it is connecting.
Or we could go back to blocking user interaction until the server connection attempt is finished

I don't think blocking user input is a good option since there were a lot of complaints about that causing problems in poor service (since that would also prevent disconnecting from the server in the side menu).

I think just updating the connection widget to show "loading" would be good, since most people don't really care if it's still in the connecting or loading phase, only that it isn't complete. If it's taking a long time, they can tap on it to see which part it's stuck on.

I agree with the spinner in the app bar.

@advplyr are you able to implement this? If not I can in a week or two :)