Jithen,
Yes at 10 rest.config has to be edited to update the SOAPUrl and SOAPSSl url to not use the URL generated for the hostname. Since Web Services can be installed independent of SOM/SOC, the webserver settings from GIS Server post install may not be always available.
I'll submit a request for solution (post 10.0) that will allow updating the SOAP URL in rest.config without the need for hand edit.
Ravi