I’m not an expert at such things, but I think 755 would probably be safer.
If I understand you correctly, you have the domain and sub-domain both under the control of your machine user and the web directories for both are within your home directory. You have MT installed in both web directories and it works fine in your main domain, but not in the sub-domain.
While I have very little experience with MT, this seems strange to me, as here at DreamHost sub-domains are basically treated the same as full domains, if your MT install works fine in your main domain, a similar install should also work in your sub-domain, assuming the (sub)domains are configured the same (PHP versions etc.).
When you changed the user that controls the sub-domain, did you re-install MT in the sub-domain, or did you copy the existing install from the old users home directory to your home directory?
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