In reply to:
Does Dreamhost allow ROMs on the server or is that a violation of the TOS? I didn't see anything specific when I read over it.
I'm not sure whether you are serious with this question, or if you are just wanting to discuss the subject here. 
ROMS are like any other code. It's all a matter of copyright and intellectual property laws. Dreamhost's TOS is actually very clear and about as specific as it gets, in relevant part:
In reply to:
LAWFUL PURPOSE
1. Customer may only use DreamHost Webhosting's Server for lawful purpose. Transmission of any material in violation of any Country, Federal, State or Local regulation is prohibited. To this effect, child pornography is strictly prohibited as well as housing any copyrighted information (to which the customer does not hold the copyright) on DreamHost Webhosting's Server.
If any of those terms are confusing to you, you can find *lots* of resources on the web about the legal aspects of copyright, including the ESA's FAQ page, which, even if it *is* on a trade group's website, is very accurate.
Hey, I'm not saying it's "right" but "it is what it is" (don't shoot the messenger). 
edit: Double wow - double simultaneous edits, too! ha!
--rlparker