You've got two problems here. First, as sdayman pointed out, you need to use URI paths, not filesystem paths. In other words, remove "/home/[USERNAME]/DOMAIN.com" from your RewriteRule.
The second problem is that what you're trying to do requires wildcard DNS. If Dreamhost has set this up for you already, great, but it isn't enabled by default and you can't turn it on yourself via the panel. You'll have to submit a support ticket to request this.
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