Thanks for checking, that backs up how I remembered the scene. Fits better in the post-war timeline than during, at least for me.
I can't really see why the Federation would work with a Dominion ally, or at least neutral power known to supply the Jem'Hadar with their lifeblood, during the war. But post-war, when they are desperate for allies (as per Picard's own words), they would be willing to overlook things for the right ends.
After a gruelling war, with millions dead on both sides, a Fountain of Youth would be worth any price.