Solved - I asked DH support, and they helped even though this is related to custom php.ini stuff. It worked, but the answer was so over my head I need to share it. Thanks for the pointers folks.
Actually your .htaccess was 100% fine, nothing wrong with it. The part of apache that makes it so that your scripts run as your user didn’t like the permissions that you had set on your cgi-bin directory. Apparently if anyone except you can write to the directory, it won’t let you run the cgi (in this case php.cgi). Anyway, chmod g-w ./cgi-bin fixed everything.