After some follow up with Dreamhost support, they emailed me the following:
You've actually gotten the entire issue sorted with one minor exception - there is a bit more to creating and using a custom php.ini to work around this.
The following wiki has instructions on doing this in a way that will work on our systems.
It looks a bit complicated but if you're comfortable with the shell you'll be fine.
http://wiki.dreamhost.com/PHP.ini----------
When I arrive at the instruction page, after reading the large imposing warning at the top of the page, I find the following:
Modified existing php.ini but not seeing the changes?
See the FastCGI page for instructions on how to either restart FastCGI or force a recache.
Restarting FastCGI from the shell:
killall -9 php5.cgi
Force a recache:
touch $HOME/example.com/cgi-bin/php-wrapper.fcgi
--- Does this sound like the next step?
Thx again for all the help!