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After a ppp connection is made the first two nameservers in resolv.conf are overwritten by those in /etc/ppp/resolv.conf. Thus trashing the DNS resolution of for example the local network. I've commentted out the entire section in ifup-post ppp0, this works fine appart from on auto-dial which remains broken. AMP
Add the line PEERDNS=no to your /etc/sysconfig/network-scripts/ifcfg-ppp* files.
I'd maintain that this *is* a bug since it means your default installation won't work right for many people. Drop the ppp connection and suddenly you're hanging up left and right... Also, it's pretty obscure to find since ifcfg-ppp0 doesn't even have a PEERDNS=yes entry by default and this isn't in linuxconf as far as I could see. You've got to fix this in future releases of RHL.
Problem is also present in redhat 6.2 althought they atleast include the option in the ifcfg-ppp0 file now. Althought I would like it if the would ask you before had. Also this doesn't respect File atrrib. as I set resolv.conf to read only and it was still over writen.