First, check the DreamHost wiki:
In particular, you need to enable fastcgi for your domain.
To force your app into production you can edit your environment.rb file:
RAILS_ENV = ENV['RAILS_ENV'] || 'production'
They are looking into setting this via your .htaccess file, but I'm not sure if that works yet or not. You can try it by adding this:
SetEnv RAILS_ENV production
I have a few other odds and ends about rails at DreamHost: