To set up the domain pointing with Dreamhost, you go to the Manage Domains area, then Click on Add New Domain / Sub Domain button (located top center of page).
Fill in the Fully Hosted section fields and in the "Specify your web directory" field, enter the directory where you have your main (first) installation of wp-hive.
If the site you would like pointed to your wp-hive is already hosted by Dreamhost (as in your case I think), you can skip the Add New Domain / Sub Domain part and from the Manage your Domains area, instead just go to the domain (or sub domain) you want pointed, click on "Edit" in the Hosting column, then fill in or modify the "Specify your web directory" field so that it's the domain name where your first wp-hive install is in.
I was also a bit confused initially by how to set up the domain pointing and tried the above out with my Dreamhost account and it worked fine right away with the couple of blogs I tried to set up with the wp-hive plug-in and approach... really impressed with this plug-in.
I don't think you need to use Dreamhost's one click installs once you start using wp-hive since once you do the domain pointing and go to that domain or sub domain, it begins the one click install I think.
I'm still learning this myself but hope this helps out.