If /etc/sysconfig/network has the hostname set to localhost.localdomain, when the machine boots, it will uses reverse DNS to get the hostname and set it properly. However, if a PCMCIA network card is used the hostname is not properly set. This appears to be because network initialization is delayed until PCMCIA is up, and the PCMCIA scripts don't pass the boot flag to ifup. It PCMCIA is moved earlier in the boot sequence, before network, then everything works correctly. I have seen Bug #7693, Bug #8328, Bug #15275, and Bug #18355 referencing the order of startup for network and PCMCIA and they all basically say 'everything works, PCMCIA handles it', and that dependencies need to be met, so it won't be fixed. This is not handled properly, and it should be possible to get PCMCIA in a location that deps are met and before network.
Thanks for the bug report. However, Red Hat no longer maintains this version of the product. Please upgrade to the latest version and open a new bug if the problem persists. The Fedora Legacy project (http://fedoralegacy.org/) maintains some older releases, and if you believe this bug is interesting to them, please report the problem in the bug tracker at: http://bugzilla.fedora.us/