Linuxconf has the ability to setup sendmail "masquerading rules" to rewrite from addresses. While I can't read the sendmail.cf rules (but then again, who can!?!), my testing shows that mail sent (w/ elm in my case) from a local account does not get the from address rewritten. This was tested with both username@localhost and username.
*** This bug has been marked as a duplicate of 3202 ***