I ran into the same issue using Microsoft's SMO objects in C#. I opened a case with Microsoft and they confirmed that there was a bug. As you discovered, the problem is that when you rename an object whose definition is contained in sys.sql_modules the object gets renamed in sys.objects, but the source code is not modified in sys.sql_modules.
Interestingly, the people responsible for SQL Server Management Studio have "fixed" the problem in their code. Whenever you script a stored procedure through the right-click menus the new (correct) name appears in the script even though the old name appears in the sys.sql_modules record for that stored procedure. Apparently, they rebuild the definition line up to the AS keyword and then concatenate the rest of the script from sys.sql_modules. What a kludge!!!
Why not fix the underlying problem? When you rename an object whose definition appears in sys.sql_modules, replace the old name with the new name in the object definition script in sys.sql_modules!
From SQL server books online:
http://msdn2.microsoft.com/en-us/library/aa214392(sql.80).aspx
Topic: Modifying and Renaming a Stored Procedure
Note Renaming a stored procedure does not change the name of the stored procedure in the text of the procedure's definition. To change the name of the stored procedure in the definition, modify the stored procedure directly.
