Yes, I tried it in our lab, it works well.
Maybe .htaccess was not enabled, rewrite engine is not enabled or you used wrong URL to test it.
The rule only works with URL ending with "index.html", if you using URL like "...frankandcollen/" it wont work.
You can make caching more flexible like you described with Rewrite Rules by setting environment "Cache-ctrl", like
RewriteCond ${QUERY_STRING} cache=0
RewriteRule .* - [E=Cache-control:no-cache]
You can use regular Cache-Control directives.
You should create one or copy the one used by apache php, usually located at /usr/local/lib/php.ini.
APC may not work very well for shared hosting with PHP suEXEC enabled, eAccelerator will work better if the code is stable for the PHP version used.
eAccelerator is recommended for LiteSpeed suEXEC PHP.
FastCGI is not as fast as our LSAPI PHP. LiteSpeed will use LSAPI by default even if you use Apache + FCGI PHP.
Maybe it is a bug of internal swapping memory usage tracking, lshttpd thought swapping memory has been used up, but actually not. we will add more logging when it happens