Ah, that's an interesting use. Since it's running as a cron job and wasn't time critical, and you were running into resource limitations on your Dreamhost web server, I was thinking that you might be able to utilize a server sitting at your house running a cron job where it would nightly suck the images down from your Dreamhost web server, do all the cpu intensive image-manipulation work, then reupload all the processed thumbnails.
BTW, I know there's some argument about whether it really works or not, but have you tried running your jobs niced?
BTW, another potential solution is only running your script when the load is low. This doesn't solve the problem entirely because your job may be killed anyway but is very nice to your neighbors on the server. Then again, nice may satisfy that requirement adequately. (Don't mind me, I'm just paranoid about server load from waiting processes, since that's a frequent server killer)
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