ok... I've been narrowing in on my issue...
First... i do not have Fedore or chroot environment (that seems to be a common problem for others, but not the problem in my case). using RedHat ES 3 with latest Current cpanel.
I've looked for all sorts of things and it seems that my problem is related to rndc.key not having a key in there. I tried rndc-confgen, but I'm getting another error:
Unrecognized character \x7F at rndc-confgen line 1.
... so basically... i think my problem is related to the fact that rndc keys are not set/exchanged by the cluster manager.