When using this option, your module invokes function mobile_tools_create_mobile_url($url) to create mobile link. But that function is flawed is that it creates link that starts with m.* by default.

There are settings for Mobile Tools (admin/settings/mobile-tools) where you actually specify the domain for mobile site.

I changed some part of mobile_tools.inc for my liking:

function mobile_codes_data_url_mobile_tools(&$data) {
  global $base_url;
  if (strpos($data, $base_url) === 0) {
  
  $host = variable_get('mobile_tools_mobile_url',$base_url);
  $url_parsed = parse_url($data);
  if (!array_key_exists('path', $url_parsed)) {
    $url_parsed['path'] = "";
  }
  $data = mobile_tools_prepare_url($host.$url_parsed['path']);
  }
}