After talking to my friends Robert La Gesse from Rackspace Cloud and @vidluther from ThirdPartyCode, I decided messing with domain alias feature of Rackspace Cloud Sites so I could save money from getting a Cloud Server, VPS or slicehost.

If you need to run multiple-separate domains and one base master WordPress template theme with multiple children themes (like what I needed was a product site, 2 blogs, a community and a corporate site) without the need for wildcard subdomains or subfolders per blog/site then running a single instance of code and database on Rackspace Cloud Sites is possible using their domain alias feature.

I recommend you follow these steps to setup WordPress MU:

1. Download and install WPMU Multi-Site Plugin
2. Setup your different domains, sites blogs locally with the help of this plugin on your dev installation and get everything working the way you want like content, themes, plugins etc.
3. Deploy to the core or ‘first’ site as you would normally do to the Rackspace Cloud Site
4. Test to see if this core site is working

Then follow these steps to setup the other Rackspace Cloud Sites & DNS:

1. Setup the actual core domain in DNS to point to the matching Cloud Site IP that should have an appropriate database for the instance
2. Deploy the local developer instance files and database to this core domain
3. Setup domain aliases with the help of this Help guide at Rackspace Cloud support
4. Test that wordpress mu is serving the core and new alias domains that you have set up in the multi-site configuration

It’s that easy and I was pleasantly surprised when it was working so easily in addition to not having to get a server or other dedicated vm/box for running WPMU in this way!