Upon installation, root@localhost does not have a password.

You should be able to connect without a password by just doing this:

$ mysql -uroot

Try the following:

$ mysqladmin --no-defaults --port=3308 --user=root password 'somenewpassword'

or you can do it the stubborn way:

$ service mysql restart --skip-grant-tables --skip-networking
$ mysql -e"UPDATE mysql.user SET password=password('somenewpassword') WHERE user='root'"
$ service mysql restart
$ mysql -uroot -p

UPDATE 2013-01-02 16:47 EDT

I am sorry, I overlooked the port number.

Here is the problem: you cannot use root@localhost against a non-3306 port unless you use the TCP/IP protocol. Please try this:

$ mysqladmin --no-defaults --port=3308 --user=root --protocol=tcp password 'somenewpassword'

Using replicate-wild-do-table=% is not the correct way to get complete replication. That would seem sensible, but here's why it isn't:

• The replicate-* options are restrictive by their presence. The *-do-* options seem to be telling the server what to "do," but in fact they are telling the server what to only do.

• The complete absence of any replicate-* configuration variables means "replicate everything."

In the simplest case, when there are no --replicate-* options, the slave executes all statements that it receives from the master. Otherwise, the result depends on the particular options given. -- http://dev.mysql.com/doc/refman/5.5/en/replication-rules.html

That, I think, is the point you are needing. It holds true for all MySQL 5.x.

Once you enable binary logging, set the server-id values on each machine, synchronize the data sets, CHANGE MASTER TO ..., and then START SLAVE, then you should have a working configuration where all DML and DDL will be replicated and your servers will be identical replicas of each other.

If you started out with identical data sets, everything should behave exactly as you would expect it to.

What MySQL replication does best and simplest is replicate entire data sets among servers without any restrictions. Trying to restrict replication to a subset of the data is a process that should carry a warning label that ends with the phrase "...unless you really know what you're doing."

When you use the --replicate-* options, the document cited above also offers this tip:

it is recommended that you avoid mixing “do” and “ignore” options, or wildcard and nonwildcard options

You are using a mix of these, which adds complexity and may explain why your DDL didn't replicate as you expected it to.