URL rewriting

I have a couple of annoyances with my current hosting provider.
My setup looks like this: i have one (expensive) account with my hosting provider that comes with a lot of disk space - i have no web site there, and it is just used for its disk space. I have other (cheap) accounts that come only with domain registration and domain forwarding. Within the directory associated with my main account, i have individual subdirectories, each of which contains the files for one of the forwarded domains. (Basically, it is if I were acting as a reseller to myself)
My first complaint is that whenever someone visits my web sites and their mouse is over a link, their browser status bar shows entire "real" URL from the top of my service provider's site down to the directory containing the site they are visiting, like this: http://myserviceprovider'sURL/mymainaccountdirectory/myforwardedaccountdirectory/page.html
Now, i believe i could work around this by using fully-qualified URLs everywhere, but if I look at web sites that are hosted by people reselling DH-hosted space, they seem to use relative URLs freely on their customer's web pages, yet my browser shows no evidence that those sites are actually subdirectories under a common parent that is, in turn, a directory on DH.
I believe that this is a "URL-rewriting" issue, if i have the term correct, and am wondering if I switch to DH, will I "automatically" have that directory-structure-hiding functionality? or are these people who are reselling DH-hosted space doing something that I simply don't see?
And, on a related note, will i be able to treat each of my web sites as a separately-updatable entity? As it exists now, i cannot use Front Page, for example, and treat each of my web sites as a separate entity. instead i have to define the entire structure within FP as a single site and upload all changed pages as a group. This has been acceptable to me since the whole mess is really my own web sites, but this clearly would not be acceptable to someone who was reselling DH space, as a reseller would be editing their client web sites & updating them independently at different times.
If i were to use DH, would i free myself from these annoyances? would someone visiting my site see http://mydomain.com/page.html on their browser status bar when their mouse was over a link, and could i update each forwarded domain separately, as if i were a hosting-space reseller?

Every domain you host at Dreamhost is it's own separate entity. I seem to notice that some web hosts only let you have mulitple domains if the secondary ones are served out of a subdirectory of the first, which I think is what you're describing. This is extremely poor design and will break many things and make other things needlessly difficult. Rest assured that you won't find that here. I wouldn't be here if that's how it was done.

This is an example of what your directory structure will look like in your home directory:

example1.org
example2.org
example3.net
subdomain.example2.org
subdomain2.example2.org

... and so on. No sites are nested within others; all have their own exclusive directory. No URL rewriting or aliasing necessary.

In reply to:

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all have their own exclusive directory. No URL rewriting or aliasing necessary.

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This is one of the major factors that caused me to move to Dreamhost. This and the fact that each domain (or sub domain) can have its own Independent email accounts.