If you delete an account with rp3-config, the ifcfg-ppp* file is removed, but the /etc/wvdial.conf entry is not. When you try to recreate one with the same name, it complains that it already exists, although it does not appear in the listing.
This looks to be fixed in rp3-1.0.7 in GNOME CVS and Raw Hide. Please try upgrading to this version and let me know if it fixes the problem.
It appears that there is some discrepancy between rp3/wvdial.conf and ppp/pap-secrets, possibly due to an upgraded system: If the pap-secrets contained a server name of anything other than an asterisk, then no matter what you do to wvdial, it'll still take the pap-secrets secret (perhaps in the order that it was entered - if doing an upgrade, the old entry of ppp0 will still be present). Manually changing the server to * fixes this problem.
Bug 8976 has been closed because a workaround in final message, and rp3 is a deprecated package that is not in the latest releases of Red Hat Linux.