Rails 3 not able to connect to remote DB with mysql2 gem

Question

1. I have 2 environments: development and development_with_production_data.

2. The environments only differ in their database.yml entries:

   development:
     host: 127.0.0.1
     adapter: mysql2
     encoding: utf8
     database: [REDACTED]_development
     username: root
     password:
     pool: 5
   
   development_with_production_data:
     host: [REDACTED]
     port: [REDACTED]
     adapter: mysql2
     encoding: utf8
     database: [REDACTED]_production
     username: [REDACTED]
     password: [REDACTED]
     pool: 5
   

3. I have verified that the values I have [REDACTED] above are the correct values. I have a gui that can connect just fine and a rails 2 app that connects with the same [REDACTED] values.

4. Loading up and working on the development environment work perfect, locally.

5. Loading up and working on the development_with_production_data environment will not even anything but static, cached pages. No error messages, no timeouts, nothing. All I see is this:

   coneybeare $ rails s -e development_with_production_data
   NOTE: Gem::SourceIndex#all_gems is deprecated with no replacement. It will be removed on or after 2011-10-01.
   Gem::SourceIndex#all_gems called from /opt/local/lib/ruby/gems/1.8/gems/bundler-1.0.13/lib/bundler/rubygems_integration.rb:256
   .
   => Booting WEBrick
   => Rails 3.0.7 application starting in development_with_production_data on http://0.0.0.0:3000
   => Call with -d to detach
   => Ctrl-C to shutdown server
   [2011-05-09 01:23:48] INFO  WEBrick 1.3.1
   [2011-05-09 01:23:48] INFO  ruby 1.8.7 (2009-06-12) [i686-darwin10]
   [2011-05-09 01:23:48] INFO  WEBrick::HTTPServer#start: pid=3854 port=3000
   

6. I am using rails 3.0.7 and have tried both mysql2 0.3.2 and mysql2 0.2.7

What could be causing this?