We use a similar setup for the explicit purpose of being able to easily move databases and instances from one server to another should the need arise.

I would recommend that you (for the sake of sanity) standardize ports being used - each instance has a specific port. For example applicationinstance1 would have port 1463 in dev, qa and production. This can be configured even after the instance has been in use for some time.

Ports are not typically used in DNS names, nor are databases. DNS typically ends at the instance level.

I would start using the dns,port# as a standard procedure in the code and then you can specify dbname in your constrings.

By specifying the port#, you also ensure that you will connect should the Browser service is turned off. We turn it off in our environments intentionally.