having two stages with the same name results in incorrect hosts being used

This sounds really strage, we have several Webistrano instances each with multiple projects, all with the production and test stage and we never observed something like this.

Are you sure that the different DNS names don't point to the same IP?

Positive, I've got 6 virtual machines each with different IPs and DNS names that do resolve properly. I am able to create stages on each project that are different names (like prod-a and prod-b for projects a and b, respectively). When I do that, the different hosts are used. I did have to create a separate role as well (in this case i called it "java"), since the projects are pure file projects representing tomcat webapps and don't need all the rails stuff. I've attached the capfile export from my webistrano instance if that helps.

capfile with custom recipes for "java" role