Of-course, this /cgi-bin/ directory should be within your domain directory ie: mydomain.com/cgi-bin/
Yes, you leave the php.ini file mostly as-is and just change the options that you need to.
The PHP executable (php.cgi) will by default look for the php.ini file in its own directory. Copying just php.ini would not suffice, as the original executable would not be using this local php.ini file.
So basically, you need to copy php.cgi and configure your domain to use this copied version so that your new modified php.ini file actually gets used.
Save [color=#CC0000][b]$50[/b][/color] on DreamHost hosting using promo code [color=#CC0000][b]SAVEMONEY[/b][/color] ( Click for promo code details )