[Dovecot] dovecot creating literal %d/%n/ folders

[sean darcy]

I have a virtual user test1.

cat /etc/dovecot/users
test1@<mydomain>:{PLAIN}test1pass:504:504::/home/vmail/%d/%n
catchall@<mydomain>:{PLAIN}password:504:504::/home/vmail/%d/%n
@<mydomain>:{PLAIN}password:504:504::/home/vmail/<mydomain>/catchall
test1 at example.com:{PLAIN}test1pass:504:504::/home/vmail/%d/%n

ls /home/vmail/%d/%n/mail
cur  dovecot.index.cache  dovecot.index.log  dovecot-uidlist 
dovecot-uidvalidity  dovecot-uidvalidity.4eab20a7  new  tmp

and mail to test1@<mydomain> goes into this %d/%n folder. In fact 
dovecot created the folder - at least I didn't.

from dovecot-info.log

Oct 28 17:43:11 auth: Debug: master in: USER    4       test1@<mydomain> 
   service=lmtp
Oct 28 17:43:11 auth: Debug: passwd(test1@<mydomain>): lookup
Oct 28 17:43:11 auth: Info: passwd(test1@<mydomain>): unknown user
Oct 28 17:43:11 auth: Debug: passwd-file(test1@<mydomain>): lookup: 
user=test1@<mydomain> file=/etc/dovecot/users
Oct 28 17:43:11 auth: Debug: master out: USER   4       test1@<mydomain> 
    uid=504 gid=504 home=/home/vmail/%d/%n
Oct 28 17:43:11 lmtp(4533, test1@<mydomain>): Info: 
l6DnLacgq061EQAABoXEcA: msgid=<4EAB21EC.9070905 at gmail.com>: saved mail 
to INBOX

I would have expected dovecot to expand this to 
/home/vmail/<mydomain>/test1.

Or are the %u %d variables only expanded in certain files?

sean