I'm receiving the same error after setting up remote mysql, if I try to load phpmyadmin from cpanel I get "phpMyAdmin - error 2005 - Unknown MySQL server host '"##.##.##.##"' (1)"
I've also had trouble moving accounts from my old server to this new one, the transfer looks like it works but the databases cannot be accessed from the site afterwards, the only way so far I've found to get the database working is to delete them and create new databases and users from scratch.
The old server is using mysql 4.0.27 and the new server is running 4.1.21, I'm guessing the transfer account code doesn't deal with mysql version differences.
Pete