Oh no ... this is a huge problem for me; and I already spent the over $300 on a two-year prepurchase of a Level 3 account.
My email client (OS X Mail) reports the number of unread messages of an entire tree heirarchy when they are collapsed. Since my stored email folders (that I was about to import from my former host) have ~20,000 unread emails, this means I will never be able to tell whether or not I actually have new mail without expanding the entire tree. But since I have seven accounts with large folder trees, I won't be able to see all the inboxes on my screen if I keep them expanded!
When the folders are themselves top-level folders (not part of INBOX), OS X Mail lists them as an entirely separate group of folders. In order to rapidly process incoming mail, I need to be able to separately see how many unread emails are in my inbox.
I also need to be able to process my mailboxes with command-line tools; given the number of messages I have stored, this is a hell of a lot easier with a clean heirarchy than with everything dumped in INBOX.
That may be the case on Dreamhost, but it's certainly not true of all hosts. Sent, Drafts, Junk etc. are often top-level folders in a normal IMAP setup, all stored in a user's home directory.
Yes, in fact the ability to specify a pathname that your top-level folders reside in is part of the formal IMAP specification. Technically if Dreamhost does not have that capability, they aren't really offering IMAP email.