Set up svn.vocaro.com just like if you were setting it up as a separate website. That's Domains > Manage Domains, scroll to the bottom, click the link to Add New Domain/Sub-Domain. You will end up with an empty web-accessible folder /home/trevors-username/svn.vocaro.com/
Then once that is all set, go to the Goodies > Subversion section and you can set up repositories. Worked great for me.
No need to mess with the custom DNS options. What you need is a fully-hosted subdomain. The trick is that the subversion server is actually implemented as an apache httpd 2 module (mod_dav_svn), not as a separate server. So there's an empty web folder, and the config file sets up particular s and directs control of those to the module, which will serve up your respository.
Thanks for your mac/treo/DUN instructions, btw - very helpful. Didn't know you were on dreamhost!