I don't see the need for all this pain.

Just copy the Domain.sites2 file wherever you prefer. You can also rename it (but leave the extension ".sites2" intact)

When you want to edit your site, just double-click the file. iWeb will open it instead of the Domain.sites2 living in the Application Support folder.

I use this method to keep different sites in different files.

@Andrew:

Beware of Dropbox. Current version does not keep resource forks; should be addressed in 0.8 release. I often use Dropbox, but you must be sure you are not sharing files with resources (aka metadata), or the file on the other side won't be the same (you can verify easily the problem sharing a text archive: on the other side it will be empty).
A temporary workaround can be placing the dropbox folder in a MSDOS drive (or disk image), so that the OS itself will manage to keep metadata splitting original files in two (the infamous "._" files that OS X creates on DOS drives).

Dropbox might drop resource forks, but so do Web sites.

I'm not seeing the problem here.

The problem could arise if you keep other support files for your site creation in your dropbox (e.g.: snippets as text archives, source images with resource forks, other files made from applications that make use of metadata).
As we are talking of using the Domain file to keep editing when away from the main Mac, chances are you need also other files for working on it.

True that Dropbox will drop resource forks, so be careful. For example, you can't use Quicken data files with Dropbox.