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Description of problem:
When installing RHEL 7 with a kickstart file that has something like:

network --device eth0 --bootproto dhcp --onboot yes --hostname test.example.com

/etc/hostname will contain test.example.com and ifcfg-eth0 will have:

DHCP_HOSTNAME="test.example.com"

Later, when changing hostname with hostnamectl(1), /etc/hostname is updated but ifcfg-eth0 is left untouched, this is then propagating to /var/lib/NetworkManager/dhclient-eth0.conf and also sent to the DHCP server.

Running dracut -f / rebooting or such tricks won't help, one would need to manually know to update ifcfg-eth0 to have the hostname configured in /etc/hostname and the hostname sent to the DHCP server in sync.

Thanks.

Version-Release number of selected component (if applicable):
systemd-219-30.el7_3.6.x86_64
NetworkManager-1.4.0-14.el7_3.x86_64

DHCP_HOSTNAME is an override in case you don't want to use the actual HOSTNAME. The hostnamectl cannot know what (and if) you want to use as an override and it doesn't know anything about the network settings.

The question is why the DHCP_HOSTNAME was written in the ifcfg file. Maybe it was because of the combination of --device and --hostname? Otherwise I don't see any value of setting it.

After evaluating this issue, there are no plans to address it further or fix it in an upcoming release.  Therefore, it is being closed.  If plans change such that this issue will be fixed in an upcoming release, then the bug can be reopened.