I haven't done this with radrails & eclipse yet, but i have deployed to dreamhost with a rails site via capistrano, and let me tell you it's no piece of cake. I probably went through 10 different recipes people had concocted specifically for capistrano & dreamhost before I found one that worked with out error, but even then a couple steps were missing which i had to guess. I think deployment is the worst part of a rails app. For every host it's different and it's incredibly frustrating. However, the total amount of wasted hours on deployment is usually made up for on the development end compared to a php based site.
The reward of finally getting it up there wasn't so great, because dreamhost is notoriously slow for rails sites. I even got one of there tech people to look at my deployed app, and the response was "15 seconds load time is about average". Maybe radrails & eclipse will speed it up. I eventually went with a VPS rails host.
Sorry for that rant.
What I'd do in your situation is contact dreamhost support people. They probably know what's going on. If not, try to track down the author of whatever recipe you're using.