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

/Users/jwalker/dev/test/.htaccess:

Options +FollowSymLinks
   RewriteEngine on
   RewriteRule    ^$ app/webroot/    [L]
   RewriteRule    (.*) app/webroot/$1 [L]

/Users/jwalker/dev/test/app/.htaccess:

Options +FollowSymLinks
    RewriteEngine on
    RewriteRule    ^$    webroot/    [L]
    RewriteRule    (.*) webroot/$1    [L]

/Users/jwalker/dev/test/app/webroot/.htaccess:

Options +FollowSymLinks
    RewriteEngine On
    RewriteCond %{REQUEST_FILENAME} !-d
    RewriteCond %{REQUEST_FILENAME} !-f
    RewriteRule ^(.*)$ index.php?url=$1 [QSA,L]