The “.fiddler” is what Dreamhost call a “dataglob” and is not necessary to be included in your paths. I’m not completely sure how DH uses it, but it seems to be a symbolic reference used in managing their servers.
DH used to suggest that you not include these “dataglob” references in your scripts. I suggest you do a “search” in the forum (select “all forums”, search for “dataglob”, and select “all posts”) for other discussion of this.
As for your WP troubles, if you are using the phpinfo supplied path for home of “/home/username/” in WP config, you will have problems, because that refers to your “root” directory" not your “web” directory. From the error message you supplied, your “home” should probably be “/home/username/blog/” (just omit the “.fiddler”).
As for why the “/home/.fiddler/username/blog/wp-content/1” (which again, for scripting purposes, is effectively the same as “/home/username/blog/wp-content/1”) is not writable, there could be a variety of permission/path related issues.
Did you install WP via the web panel goodies “one click” install, or did you install it yourself?