So adding some more data into this. . .
It looks like the tmm_config.tcl changes I made were causing the resolve call to go into nowhere. I changed it to point to a hard coded DNS server instead of $IP_ADDR_LOCALHOST. Now I can write an iRule that can successfully log the reverse of the client IP address. I'm guessing that I need named running on the BIG-IP so it can query itself. Just a caveat I suppose, I've moved on from that.
I'm now getting a TCL error: Rule DNSbasedLD - Address in use (line 3) invoked from within "pool www-pool2"
I still believe that i'm not allowed to make LB decisions in the NAME_RESOLVED event. The only thing I can think of is writing a method, in this iRule, to load balance using the "node" command. That seems really icky. Any advise would be appreciated.