smtp and v7r1 -- MIDRANGE-L

hi,

recently upgraded from v5r4 to v7r1. we are running smtp and pop server with msf framework all on one machine.

iseries(SYSTEMI) is acting as internal smtp server.
smtp traffic from and to internet is relayed through  an intermediate machine.

we use separate domain names
===========================================
MYDOMAIN.LOCAL    .... internal domain name
MYDOMAIN.COM        .... public domain name

iseries (SYSTEMI) system configuration follows:

dspneta
===========================================
SYSTEMI
APPN
SYSTEMI
SYSTEMI
BLANK
*ENDNODE
*NONE
*NONE
200
128
*LCLNETID   *ANY

SYSTEMI interface ip:
===========================================
1.1.1.4

tcp domain configuration:
===========================================
HOSTNAME       'AS400'
DMNNAME        'MYDOMAIN.LOCAL'
DMNSCHLIST     'mydomain.local'
HOSTSCHPTY     *LOCAL
INTNETADR       1.1.1.1
                              1.1.1.2

host table:
===========================================
1.1.1.4     SYSTEMI.MYDOMAIN.LOCAL
                AS400.MYDOMAIN.LOCAL
                MYDOMAIN.LOCAL
                MYDOMAIN.COM

dspdire user:
===========================================
JOHN     SYSTEMI
e-mail for user John Black
SYSTEMI
EMJOHN     ..(user account)
JOHN     SYSTEMI

SANDY     SYSTEMI
e-mail for user Sandy White
SYSTEMI
EMSANDY     ..(user account)
SANDY     SYSTEMI
...

smtp alias table:
===========================================
ID user SMTP . . . . . :   jblack
Domain SMTP . . . . . . :   MYDOMAIN.LOCAL

ID user SMTP . . . . . :   swhite
Domain SMTP . . . . . . : MYDOMAIN.LOCAL
...

smtpa:
===========================================
AUTOSTART      *NO
RTYMIN
               10
               30
RTYDAY
               0
               0
RTYHOUR
               0
               0
RTYRMTSVR      *NO
AUTOADD        *NO
USRIDPFX       QSM
ADDRESS        QSMRMTAD
SYSNAME        TCPIP
TBLTYPE        *SYSTEM
USRIDDELIM     '?'
MAILROUTER     *NONE
CCSID          00819
TBLSMTPOUT
               *CCSID
TBLSMTPIN
               *CCSID
FIREWALL       *YES
JOURNAL        *NO
ALLMAILMSF     *YES
PCTRTGCHR      *YES
DIALSCD     *NO
ETRNSVR        *NO
ETRNCLT             *NO
MIME8BIT       *NO
NFYDLVRY              *NONE
SBSD           QSYSWRK
                     QSYS
RBLSVR         *NONE
ALWRLY         *ALL
POPWDW         65535
IFCDMN         *NONE
FTRACN         *NONE
OVRRJTCNNL     *NO
ALWBARELF      *YES
VFYID          *NO
ALWAUTH        *NONE
VFYMSFMSG      *YES
VFYFROMUSR     *ALL
FWDHUBSVR      relay.mydomain.local

Sending mail from:
internal to internal domain
===============================================================================================
jblack@mydomain.local to swhite@mydomain.local    ..this mail is local to SYSTEMI
    *this works on v5r4 and v7r1

internal to any domain on internet
===============================================================================================
jblack@mydomain.local to someuser@xxxxxxxxx    ..this mail is relayed through  FWDHUBSVR    ( relay.mydomain.local, which
    is rewriting jblack@mydomain.local to jblack@xxxxxxxxxxxx)
    *this works on v5r4 and v7r1

external world to internal domain
===============================================================================================
someuser@xxxxxxxxx to jblack@xxxxxxxxxxxx ..this mail is relayed through relay and delivered to SYSTEMI with recipient jblack@xxxxxxxxxxxx .
    *this works on v5r4 not on v7r1!
    *v7r1 replays with no delivery ( not able to deliver mail for user jblack@xxxxxxxxxxxx)

seems as on v5r4 one could simply add reference to mydomain.com into SYSTEMI host table and "override"   the domain portion of smtp alias table.
any ideas on how to "convince" the v7r1 to accept incoming smtp with recipient domain portion mydomain.com?

any help would be appreciated
thanks
dino muzic