I have the same battery but I never encountered the problem you described. With "normal" use, I go to bed in the evening with approx. 70% battery life remaining. Did you follow Mugen's included instructions on how to initiate the battery? (Click here:
http://jj.arvoaus.com/Mugen-Power-Battery-E585.pdf). FWIW, I'm on Froyo 2.2.1 (unrooted).
The first few times the battery is used, it will not yet have the full capacity. But if you follow the instructions in the link above, it will condition the battery so you get its full potential.
The phone's battery charge level indicator uses the voltage of the battery as reference to its charge status. For instance, 4.2V = 100%, while ~3.7V, the battery is almost depleted/empty. (Li-Ion/Li-Polymer batteries should not be operated below 3.6V)
If you're still having problems with reported battery capacity:
1. Restart the phone (Power off then power on)
2. Remove third-party battery indicator apps, then restart the phone
3. You may have a defective battery. Contact Mugen Power for assistance
HTH