I'm not really a web programmer, but it seems to me that you are really working hard to do something that should be easy. IE:
I have a web-hosting package from network solutions that allows exactly what you are trying to do.
I can host up to 40 websites, with 2400+ emails to split up between then as I see fit. To create a new website I create a subfolder, copy in my code, then select to add a new website. It asks me for the domain url and which folder it should point to and it gives me an IP address and name-servers to point my domain's DNS to. I only have to register 1 domain through NS to get this package and, if I pay for the hosting by the year, it comes out to about $12 per month.
I can also host somebody else's site and create their own ftp login and then can only see their folder and modify their site as they desire. They have no way of knowing that it is a sub-folder of my main account. It works flawlessly. I currently have 5 or 6 sites up and I have plenty of expansion available.
This may help or not, but just FYI.
:-)