I don't think that would accomplish what you want.
.htaccess should reside at the highest level of your website, so in dreamhost, it'd be /<domain name/.htaccess
Are you running your own code, or is this an application/script that you downloaded?
Either way, I think you'll probably need to write some mod_rewrite rules to get the url.com/page to work properly, maybe something like:
RewriteRule ^(.(plus symbol))$ /$1.php [NC]
... but, if someone went to /Page, it would request /Page.php on the backend I think. So if the file was actually named PAGE.php, it'd return a 404, because the case was different.
Also, you should restrict the kinds of characters that you end up passing along, perhaps allowing numbers, alphanumerics, underscores, and dashes would be enough. if so, use:
RewriteRule ^([a-z0-9-_](plus symbol))$ /$1.php [NC]
Edit: Silly me, messed up the 's and the *'s and the .'s. Fixed now. For reference:
. = any single character
(plus) = The previous character 1 or more times
* = The previous character 0 or more times
We want the rule to only trigger when there's actually something after the url.com/, so we use (plus).
This forum doesn't like the plus symbol. Substitute (plus symbol) with the actual plus symbol.