This works:

<VirtualHost *>
        <Directory /Users/jwalker/dev/test>
                AllowOverride All
        </Directory>
        ServerAdmin jason@coolbluei.com
        DocumentRoot /Users/jwalker/dev/test
        ServerName test.jwalker.coolbluebeta.com
</VirtualHost>

This does not (causes "mod_rewrite: maximum number of internal redirects reached. Assuming configuration error. Use 'RewriteOptions MaxRedirects' to increase the limit if neccessary." error):

<Directory /Users/*>
        AllowOverride All
</Directory>
VirtualDocumentRoot /Users/%2/dev/%1