Well, unfortunately, there lies your problem.
If you can't install it in the root of your site, then it's always going to have the subdirectory in the url. There isn't a magic option that can really change that, because that's where it's installed.
Redirecting to the root with htaccess isn't going to do anything but point it to your main WP install, which won't have a clue what to do with the request, so you get a 404.
So, you'll either have to move your main blog into MU, and use MU in the root directory vice regular WP, or live with the subdirectory.
Granted you could always install it on a subdomain as your primary MU domain, such as blogs.yourdomain.tld, but then you would have urls that are 4 levels deep if you use the subdomain option. They would look like username.blogs.yourdomain.tld as an example.
In that case, you could install it to a subdomain like above, but not use the subdomain option, so the urls would look like blogs.yourdomain.tld/username/ instead.
So this really isn't a software problem, it's just how you have it configured/set-up.
If it's in a subdirectory, it's going to be in the url.
Granted you could get really fancy with php and whatnot, move everything but your index.php file of your standard WP install into a subdirectory, temporarily disable your main site, install MU into the root directory, and the put in some checks in php and see what the domain comes up as. If it's for your primary WP install, have it include the blog header file in the directory for the standard WP install, and if it's not the main domain site, then include the MU related file (in the root directory) instead.
However, that may be over your head to pull off. Since I don't know your skill level, that's why I mentioned it. As a note, I haven't even thought of testing a setup like that, so the above reference is in theory only, and I don't warrant or guarantee my ramblings usefulness for any purpose. :D