Yep! Actually, with the DreamHost configuration, it will happen "automagically" without your having to do a thing. If an "index.htm" file and an "index.php" file are in the same directory, unless you specify the file name in the url, the "index.htm" will be loaded before the "index.php" file
There is more information about how this works, and about how you can change the behavior, in the DreamHost Wiki article on the Apache Infrastructure.
Well, you would want to delete the "index.htm" file when you are ready to "launch" your Joomla! Deleting the "index.php" file would bork your Joomla! installation.
Note that there are a couple of caveats to doing it this way:
1) There is no "security" in place to prevent someone browsing to http://yoursite.tld/index.php from running your "under development" Joomla! site.
2) Certain of your "built-in" Joomla! menu choices ("home") may (depending upon your Joomla! setup) just send you to http://yourdomain.tld , which would result in the "index.htm" file being displayed. This is really not a "problem" as much as a minor inconvenience when developing your Joomla! site, as you can always just browse directly to your Joomla! installation as indicated in number 1 above.
3) Make sure you Joomla! installation does not overwrite any of your existing site files (or directories - I'm thinking particularly of an "images" directory here), or your existing site will "break"