No it's not conforming if it is doing a lookup on the From header hostname. From the RFC (section 8.1.1.3):
...it is very important that the From URI not contain IP addresses or the FQDN of the host on which the UA is running, since these are not logical names.
Furthermore the SIP RFC gives an example of a valid From header as sip:thisis@anonymous.invalid where the hostname is not even a valid DNS hostname.
In most cases the From header URI is to identify the person making the request as part of the SIP challenge response authentication. In some cases SIP servers will disregard the hostname part of the From URI assuming that the authentication realm is some default value.