I was busy at work today putting the sports section together (apparently there was this tennis match or something), so I didn’t check my non-work email until I got home. I came back to find 17 new messages in my inbox, which is unusually high. A lot of them were delivery failure messages, which made even less sense.
Looking through them, it was obvious someone was sending out spam mail with a forged address at my domain. I foolishly setup a catch-all for that domain so everything goes to me. None were angry messages professing eventual death, which was nice. Some were away-from-my-desk messages, others were anti-spam confirm-you’re-a-real-person messages. The rest were bounces.
Then I looked in my spam box. There were hundreds of bounces. At least 300.
Thankfully I have Gmail, so cleaning that up was pretty simple.
UPDATE: I wake up, and the same thing happens again.
Join the club. That happens to me fairly often. In all likelihood they haven’t hacked your mail server, they’re just forging the name (as you say).
Check with your service provider; apparently there’s a way that you can at least avoid getting all those bounce messages via some sort of filtering at the server. I keep meaning to do it on my end but I haven’t gotten to it yet.