Telnet message queued for delivery but will not deliver to 1 recip



Hello,
I'm having trouble with mail delivery to a single recipient.
I am using telnet on our local network to troubleshoot. I am testing with
two recipients - let's say r1@xxxxxxxxxx and r2@xxxxxxxxxx

My telnet session goes:
telnet 123.124.125.126 25
ehlo
mail from: test@xxxxxxxxxx
rcpt to: r1@xxxxxxxxxx
data
Test message to r1
..
quit

that message will reach r1 fine. If i substitute r2@xxxxxxxxxx in the telnet
session the recipient never receives the message.

There are no messages in the queues waiting to be delivered and nothing
showing in eventvwr to indicate a problem. r2 is enabled, email address is
correct etc...

Another strange issue is that if r2 sends an email to an external receipient
and they reply to that message, r2 receives it. If that same external
receipient just tries to send an email direct to r2, r2 never receives it.

Exchsvr 2003 w/ SP2 running on Windows Server 2003 SP2

.