Dreamhost does not, and has never offered Fantastico. I have no idea where you got that information, but it is just…well…incorrect.
Dreamhost has wisely disabled certain commonly exploited, and unnecessary functions (all_url_fopen, set register_globals_off, etc) in the PHP environment to prevent those “experts” who only install others’ code from exposing entire servers to security exploits because of poor, insecure, or amateurish programming. I’m glad they do this, and you should be too. There is a big difference between trying to install a piece of someone else’s code and knowing whether or not it is safe, or wise, to do so; Dreamhost helps you with this, so you don’t inadvertently install a “mod” that has a serious security flaw in it.
Dreamhost is doing it because they recognize that many using their service do not have the expertise to safely install some of this software, and they do not want their servers compromised by such actions. As for “everybody else”, I think all the reasons you mentioned are likely to be true in one instance or another.
Actually, if you are a “self-taught/do-it-yourselfer” who want to run lots of different things safely, and want to expand your knowledge past the point of the “script kiddie” status of just blindly using others’ code (warts and all), this is most certainly the place for you. If, on the other hand, you just want to run whatever code someone makes available on the net, without vetting it or insuring it’s safety, than you will have some frustrations at Dreamhost, as you will likely have to make some accommodations for others’ poor coding before you can run some stuff here.
All that said, most anything can be, and is, run on Dreamhost and these forums, as well as the wiki, are full of tips on how to do that safely. Additionally, the forum has many experts who often help others with these sorts of problems.
Of course, YMMV and this is not the kind of place where everyone will be happy (as you just pointed out). But characterize it as it actually is - it’s a shared host,and is designed to protect all users from the foolishness of any single user, or groups of users. You can do whatever you want, even if insecure or stupid, on your own boxen, but not on a box shared by many. As for other hosts, while they may have certain settings set up to make it easier for you to run some of these “softwares” you enjoy more easily (you can also run them here, you just have to run them safely), there are very few that actually provide the flexibility and power of Dreamhost (full access to the shell being the most obvious example).
If you need help running installing/running one of your favorite softwares here, why not just post in the forums for help?