The only one you need the .htaccess in is the "/websitename", as it is displayed in the Dreamhost webftp client. The actual "path" to that directory (which you would see via the shell) is "/home/yourusername/yourwebsitename.tld/".
"Timing out" is an entirely different issue (though it could be related) than the upload failing because of a filesize limitation. PHP also has an execution time limit; if that is exceeded by the upload processing, there will be a failure because the process took too long to complete irrespective of the filesize. It is really important what "error" is "given". We can't really tell what is happening if you don't share the details of the error .
Yes, there is. It is "adjusted" the same was as the other PHP settings. I, for one, will not participate in helping you set a "time limit" for up to "20-30" minutes on a shared server; if everyone did that it, an instance or two of a runaway, or abusive, script could quickly bring a shared server to its knees
".tld" simply refers to your "top level domain" (.com, .org, .net, .uk, etc) It was just may way of saying "yourdomainname" while indicating that it has a "dot someting" at the end
That is the directory you are automagically placed into with Dreamhost's webftp (it's not hidden, but you won't see it listed that way, because that is the directory you are "dumped into" when you login).
Have you checked yet whether your changes have taken effect by running phpinfo? Running this will tell you what your instance of PHP has for it settings, allowing you to see if your "instance" has been changed.