After messing around with some things I got it to say something when I telnet in, but found another problem :/ I have no idea where this protocol mismatch comes from, but will post configs upon request. Heh...
Here's what the telnet session does now.
[root@webmail2 ~]# telnet localhost 22
Connected to localhost.localdomain (127.0.0.1).
Escape character is '^]'.
Connection closed by foreign host.