"When I run testsaslauthd with the user mail_admin it fails. That is the user account that is being used to auth, correct? "
mail_admin is the database user name that is used by SASL to get into the MySQL database "mail" to find the user %u at domain %r.
if you type "mysql -u mail_admin -p" ... it should prompt you for a password. Copy and paste the value from the smtpd.conf and it should log you in. Type "show databases;" and one of them should be "mail". Type "use mail;" and it should switch to the mail database.