Ok, I think I may have figured it out, but I need someone else who is getting the "host not found" error to try this out:
I think its the "Bookmark Name" field that is the problem...
If I left it blank, I could not connect. As soon as I entered text there, Voila! It worked!
Since this is merely a "placeholder" within Keypebble's internal address book of VNC servers, it does not appear to matter what the text is, at first I used the word "test" then switched it to something more meaningful later.
So, if someone who is still experiencing the error could try entering some text into that field, and report your findings here, that would be very helpful
-John