SpaceAce,
You forgot about suexec. I know we use it, and I'm guessing a few other hosts do as well. It allows scripts to be ran under a differnent userid than the apache server is run as. It is configurable per virtual host, so we obviously have everyones script run as them (their FTP login). Much more secure, for obvious reasons.
It is very possible suexec is being ran in his case. Try chmod'ing something to 777 and see if you get a 500 server error. Suexec will refuse to run on world writeable directories/files.
So yes, it does give us a bit more of a support problem when people read the directions in script X's readme to chmod stuf 0777. Ugh.
Too bad PHP cannot emulate this behaviour somehow.
Another reason why PHP is the devil and must die.
-Phil