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Not sure if anyone else is having the same issue, but the current method of managing the MySQL users and database permissions is a little confusing and non-intuitive. Not only to the server admin but to the end user as well.
The way it is now
The way it should be
Done, no Unix user account needed.
I agree that the manage users screen is highly confusing at times. I believe if that screen was reorganized/relabeled then it would potentially solve the MySQL user management issue as well. You, as root at least (unsure of other users access and ability) , can create users on the MySQL Webmin module.
-Dustin