This seems to be doing what you are telling it to do to me. 

Pseudocode:

For every host in the inventory
  For every host-inventoryname
    Add the host to the host-inventoryname group.

The one part I'm not sure about is whether host-inventoryname is being defined 
once and they are only being put in one group or if they are being put in 
multiple groups each.

Adam

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