There is a base web folder per domain, but the big difference here is that you can create real linux users and each web folder can be put in a separate linux user's home directory. Alternatively you can just have one giant user with a bunch of web roots under that home directory.
I think the answer to this one is yes, though I've never done this myself.
Yes, though you have to get support to do this for you. Note that you have to give them a good reason. I told them it was in order to use Wordpress Mu with one subdomain per blog.
There have been some systemwide issues in the past - or clusterwide, in the case of Blingy. These plus "bad neighbors" account for the majority of downtime. You can guage the impact of the Blingy problem yourself from the complaints. The "bad neighbor" problem seems to die down after a while as your server "ages" and the CPU/memory abusers get their accounts turned off or learn and your server gets filled up with nice, reasonable neighbors.
Well, looking at my wife's server, it's running with a load average of 2 and 55% idle cpu.
I think the DreamHost setup is comparable to most other quality shared web hosts. I think they distinguish themselves with:
1. A superior web panel, which is mostly good for unsophisticated user (like me, most of the time).
2. SSH access, which is mostly good for the sophisticated user.
3. A logical setup of web directories in the linux home directories of whichever users you set up, which makes much more sense to me than the "cpanel way".
4. A company that cares about their customers and is ethical. They are transparent and admit mistakes. This doesn't mean they don't make mistakes - and some of them big ones.
5. They're pretty fun to work with.
6. Their NFS setup creates performance problems for some apps, but makes their servers easier to manage. This is a not-insignificant tradeoff, I think.
Use the [color=#CC0000]3DOM50[/color] promo code for 3 extra lifetime domains and $50 off
More Dreamhost coupons here!