If you create an FTP account specificly for him, the folder structure would look more like /home/ftpaccount/domain, rather than /home/youraccount/hisfolder as you’re expecting. If you want to do it the complicated way, though, you could set the domain name to point to your username, and then create a link from his account to that folder in yours. If you ask me, though, it might be easier to just set up that domain name (assuming he has one picked already) to point to the FTP user. That way anything he does will be in his own folder /home/ftpaccount/domain and leaving your files and things alone. Just a random suggestion, though.
As for setting a disk space limitation, you can do that right when you create the username.
Yes, I have an opinion.
Get a minimum 50% off with the “haveadreamyday” promo code, and… have a dreamy day. Original, no?