Hey anything is possible. I never cease to be amazed at the lengths to which some will go to manipulate an affiliate program, but you should RUN, don't walk, away from this nonsense!
What is the link to this blog? I'd love to check out exactly what this guy is doing. Is this "offer" on his blog, or did you receive it via email?
Here is how a legitimate "no hoops" sign-up with DreamHost would work for you:
1) Sign-up for a level 1 plan using a $97 promo code.
2) Make sure you pay with a method that gets you the full promo discount, and allows you a full "97 day guarantee" (read carefuylly). A free domain comes with the signup, and remains "free" to you as long as you continue your hosting service.
3) You will have a "raw total" of $119.40 "due" before the promo code discount - after the $97 discount, you will have a "balance due" of $22.40 - which buys you a free domain and a years worth of level 1 hosting.
If you want to leave within the first 97 days, you will be refunded what you paid minus a $9.95 charge for the domain (which you now are the registrant of).
There is no need at all to participate in whatever this guy is offering you, even if all you want is the domain name.