From the question in the FAQ How do I make a users website available at "http://www.mydomain.tld/customerdomain"?
I readAnother way, which I believe is the best option (saving the best for last!) and most closely matches what you're currently used to without the security implications, is the Automatically create alias domain option (found in every Server Template, though to keep it simple you can just edit the Default template). Just select the radio button beside "Create under" and fill in the domain under which you'd like all of your customer domains to appear.
Perhaps the software has changed but I can't find this option anywhere. I can search and find this option but it just takes me to a list of the domains on the system and clicking into a domain doesn't have this option (I installed last week on a fresh Ubuntu virtual server, GPL version).
Many thanks for any pointers.