Just saw this video from Scratchworx.com where they use the Denon S3700 in a MIDI hybrid mode with Serato. It looked very cool, so I looked closer and it seems to support Traktor aswell. :) And the video was posted a month ago.
According to Denon it's a mode that generate it's own DVS (Timecode) signal so you don't need the timecode CDs. The timecode isn't really needed since one can controll the deck by using MIDI functions on the controller instead, however I think timecode actually has a lower latency then MIDI, so this is a very welcome feature from my point of view. Generating the DVS signal is in my opinion a smart way to utalize the great feel of timecode controll and then adding the MIDI controlls on top of that is just fantastic. Two thumbs up!
Hybrid mode on Traktor:
The video from Scratchworx.com