Im am going through the exact problem. Permissions is not the issue. Has anyone gotten Trac to work on Dreamhost? Your imput on this issue would be a godsend!!!
(I followed the latest instructions on natmaster ( http://natmaster.com/articles/installing_trac_0.10.php ). It all runs fine except for had to downgrade svn because it would not install w/o --with-apache and I dont know the path.
On the command line Trac works, but cant access online.