It looks like some still have issues with DummyURL for Reporting Services and not able to fix it with clearing the cache. If you debug the source and look at the reporting services url, you get this: "http://server:8080/tfs/defaultcollection/
or maybe some other url depending on your configuration and collection, but still, this has nothing to do with your reporting services.
Maybe this is due to the fact that I'm using TFS2010 with Reporting Services 2010 R2 or something else, but in TFS2010 it is still wrong to query a project collection for a webservice url. Use the configuration server:
ILocationService LocationService = (ILocationService)m_TfsServer.ConfigurationServer.GetService(typeof(ILocationService));
string url = LocationService.FindServiceDefinitionsByToolType("Reports").Where(c => c.ServiceType == "ReportWebServiceUrl").First().LocationMappings.First().Location;
Then append "ReportService2005.asmx"