Thank you very much for the help. With your help and the help of Dreamhost it looks like it's been fixed. I don't fully understand the cause/answer (I need to read up on php5), so I'll copy their note here and I would appreciate any feedback on what this means. Thanks again.
Here's the answer that worked:
"[he] switched you over to PHP5 and added a few lines to your .htaccess file:
AddType php5-cgi .shtml .htm .html
AddHandler php5-cgi .shtml .htm .html
The AddHandler line was the one that was causing problems for your .htaccess files. I went ahead and commented that out to disable it and it looks like things are loading properly now!"