*** Connecting to irc.domain.com at port 6667 (SSL is OFF)...
*** Connection established
*** -irc.domain.com- *** Looking up your hostname...
*** -irc.domain.com- *** Couldn't resolve your hostname; using your IP address instead
*** Welcome to the Test IRC Network [email protected]
that has nothing to do with your IRC's DNS. Unreal checks the "Client" for a hostname when connecting. If it cannot verify a hostname, you will see their IP all jumbled when you whois them. However if the server does detect a hostname for a client you will see "@blahblah.somenet.net" (ex fios.verizon.com). This is not an issue with your server at all, unless it is doing it to all of your connected clients. It could be simply that your ISP does not have reverse DNS enabled for your IP block you are connected as.