Piping mysqldump to mysql
"MySQL server has gone away" is a symptom of a max packet error.http://dev.mysql.com/doc/refman/5.0/en/gone-away.html
Modify your command to specify a larger value for max_allowed_packet.
mysqldump --opt db1 | mysql --max_allowed_packet=32M db2The default is 1M. It may take trial and error to get the right value.http://dev.mysql.com/doc/refman/5.5/en/server-system-variables.html#sysvar_max_allowed_packet
The problem may be that the load on the servers gets too high doing both dumping and loading at the same time. This also means that you lose some optimizations like extended inserts, ability to disable foreign keys which can be achieved when you dump a file then import it.
I would recommend that you use mysqldump to generate the backup then load it using mysql. That way the load on your server is reduced, and like you said it always works. You can even automate it into a bash script to do both so that you do not need to execute the mysqldump and loading commands.