Because of the way DreamHost MySQL is set up, you do not have the ability to create a database in any other way than from the panel. You already realize this, I'm sure, as you have already created the database.
The problem you are having arises because the .SQL file you are trying to to use to do your restore has a "create" query in it, and that is what is generating the "access denied for user" error (your user does not have "create" access).
The way to get around this is to open the .SQL file with a text editor, find and remove the "create" query, and save it (I'd save it as some other name, so your original is intact if you bork it).
After having done that, try again to restore using your "edited" version, which does not have the "create" query that you do not have access to run, and if you did it correctly it should now work.