Actually, I looked at that post, and it is somewhat related, but I think not germain to our issues. I strongly suggest leaving the PHP-CGI setting intact. *SO MUCH* other stuff just will not work with DH's PHP as an apache module because of the DH restrictions. There is quite a bit of information in the KnowledgeBase about this.
I would *prefer* to debug the variables/paths in wpmu to get it to run un the PHP-CGI setting, and I think it could be done. Many times substituting variable will sove the issue, and you could always "hardcode" them to the appropriate path(s) for your server. I jusst have not had the time to muck with it, and am not familiar enough with the WPMU code to know all the places I should check.
Generally, the implications of running the apache module of php vs the PHP-CGI process are a slight performance increase (usually, IMHO, negiligable), lots of broken php functions which dreamhost does not allow, and a broken base_dir restriction system. Stuff that should woprk doesn't and no one at dreamhost can really figure out why.
I think patching WPMU to run under PHP-CGI is the way to go. It wouyld be great if someone more knoweledgable that me got interested in it, as I suspect it would not be too difficult a fix (If you know what you are doing!).
-rlparker