(using limbo2) When configuring the network in redhat-network-config, i can choose to set my DHCP hostname to something optional. This information will later be saved /etc/sysconfig/network-script/ifcfg-eth0. However, ifup-post does not look in this file when setting the hostname, it does just lookup the hostname of the ip address (through ipcalc) i got from the DHCP server.
DHCP_HOSTNAME is the hostname you *request*; it may not match what you actually get.