You can definitely leave the iWeb site up while you work on preparing the new WordPress site on our end! You have a couple of options to make it happen.
In your web panel, add a free .dreamhosters.com sub-domain to your Manage Domains page, as fully-hosted. So if the domain of the upcoming WP site will be domainx.com, you can call it domainx.dreamhosters.com. Once added to your hosting plan there, you can go to the One-Click Installs page and install WordPress to domainx.dreamhosters.com, and use that as your test site. You should also add domainx.com to your Manage Domains page as fully hosted at this point, but don't need to do anything with it yet (nothing you set for it on our end will be live until domainx.com has its nameservers pointing to ours). You can set up your email addresses for it ahead of time on our end, always good to do! When it's time to make the new WP site live, you can just go to your WP settings at the test site, and change the URL to domainx.com. Then connect via FTP and rename the site directory to the domainx.com (or set the directory name in the fully hosted settings for domainx.com to match the one used on your test site). This option can be done in some different ways, but I think that'd be easiest. The URL changes can also be made without accessing the WP dashboard and settings, by going into the database via phpMyAdmin.
Add domainx.com to your Manage Domains page as fully hosted. Then, install WordPress to it from the One-click Installs page. Again, nothing you set up for domainx.com will be live until you go to where the domain name is registered, and point the nameservers to ours (ns1.dreamhost.com, etc). Then you can add domainx.dreamhosters.com as a "mirror" rather than fully hosted, to mirror domainx.com. It can get a little tricky from here, only because then you'll need to go into the database and set both the blog and home URL to work with your .dreamhosters.com mirror. More information can be found here: http://dhurl.org/235
After either option, simply point the domain to our nameservers and the new site should be live! At any point in the process, feel free to contact support from your panel with the specifics of where you're at, and we'll help guide you through.