hostname gets reset wrong by activating eth0 with DHCP

I'm running a new Fedora fc4 (2.6.14-1.1656_FC4) on a laptop and have a
cable modem.

The problem: whenever I enable eth0, either from the Newtork
Configuration gui or automatically at bootup, the hostname gets reset
from localhost.localdomain (two words, with dot in the middle) to
localhostlocaldomain (one word, no dot). This causes all sorts of
problems in communication with the outside world and within gnome. I
can easily fix it temporarily by typing the command as root

# hostname localhost.localdomain

....but this is cumbersome, and I'd prefer a longterm fix.

More info:

1) In the Newtork Configuration gui, I have the following setting:
* Automatically obtain IP Address settings with DHCP
* Hostname=localhost.localdomain
2) Every file I've checked shows the proper
hostname=localhost.localdomain, including:

* /etc/hosts:
127.0.0.1 localhost.localdomain localhost

* /etc/sysconfig/network-scripts/ifcfg-eth0:
DEVICE=eth0
BOOTPROTO=dhcp
HWADDR=...
ONBOOT=yes
TYPE=Ethernet
DHCP_HOSTNAME=localhost.localdomain
USERCTL=yes
PEERDNS=yes
IPV6INIT=no
NEEDHOSTNAME=no

(last line added by me in futile attempt following suggestion
elsewhere)

* /etc/sysconfig/network:
NETWORKING=yes
HOSTNAME=localhost.localdomain

....and yet, as soon as I activate eth0, I get:
[12]james@localhost:/home/james% hostname
localhostlocaldomain
[13]james@localhost:/home/james% prompt
[14]james@localhostlocaldomain:/home/james%


Thanks in advance for the magic incantation!

James