Just to clarify...the site in question was mine. They accused me of abusing their server while using WP. It didn't seem to matter that I had another WP site on another of their servers, which had no problems. They blamed WP and shut me down. However, they did NOT ban WordPress from their servers.
You can have multiple blogs using one database, but as you said, right now you must have a separate install for each blog. All you need to do, is have the wp-config.php file changed for each blog. You would use the same user name, database name and password, but you would set the table prefix to something unique. The default is wp_, so you could have blog1_, blog2_, blog3_ etc. Yeah, three installs, but only one database. In time, multiple blogs will be addressed. Have fun with WordPress, and don't be shy about adding your comments or suggestions at the support forum!
Jaykul, I'm looking forward to learning about your hacks! Thanks for sharing...however, you need to change two of your links in this post to .ORG instead of .COM! :) Have a great day! See you around the WP forums.