Or at the very least, create a separate environment on Dreamhost (perhaps with a different user) which you can use for testing. Personally, I've created a subdomain for all of my development work and, when I've created what I consider to be a finished release, I just copy the files from my development subdomain to where the public live site is hosted. Another advantage to this approach is that, with some clever commit hooks, my entire development environment is an automatically updated subversion working copy, so I can make changes and do preliminary debugging on my PC, then
svn commit the changes to instantly see the result in the Dreamhost environment.
I also use sshfs for more general file management and it works great for day to day filesystem tasks. The downside is that it can feel a bit sluggish at times, and I occasionally get stupid and try to untar some large tarball over the network. But I imagine even that must feel a heck of a lot faster than trying to forward X sessions -- those have always seemed sluggish to me even over a LAN.