We should follow redirects.... However, you may want to make sure that you have not set the content meta data parameter "StreamStickyHttpRedirects". If StreamStickyHttpRedirects is true, the box will process the first redirect to a particular host but will remember the mapping and apply it to all subsequent redirects. This parameter is useful for sites that load balance among different servers in a cluster and may have different encoded files on the different nodes. StreamStickyHttpRedirects enables these sites to work properly.
StreamStickyHttpRedirects is the only parameter that should turn off normal redirect processing. If you think you are having some other redirect misbehavior, please private message me an example of the problem.
--Kevin