Media Upload to Blog.dir

This is a re-post from a separate thread:

snip>Hello. I was about to post a similar problem, so I’ll add it to this thread. Unfortunately, I wasn’t able to connect the dots from the previous posts.

I’m running WP 3.0 upgraded from the most recent release of WP MU (subdomains). I have Buddypress installed, and I’ve been prepping a blog prototype here.

Just recently, I’ve encountered problems uploading media. I have been active in the command-line editing to change permissions and ownership of uploaded plugin zip files in trouble-shooting mode and I’m sure I did a chown -R to my user:group for /wp-content/. I ran across an old blog post on the need to have the /wp-content/blogs.dir directory owned by ‘nobody’ instead of the admin user, which I have changed as a fix. I’ve also changed permissions from 755 to 775. I still seem to have a permissions/ownership issue: The uploaded file could not be moved to …/wp-content/blogs.dir/2/files/2010/07

I’m concerned I have an htaccess issue. My uploaded filed script is:
# uploaded files
RewriteRule ^(.*/)?files/$ index.php [L]
RewriteCond %{REQUEST_URI} !.*wp-content/plugins.*
RewriteRule ^(.*/)?files/(.*) wp-includes/ms-files.php?file=$2 [L]

The whole permissions/ownership thing is the bain of my WordPress existence. Thanks for any assistance forthcoming!
<snip

Recommendation from @ipstenu:

Schaeffer -This too should probably be a separate topic 🙂 You shouldn’t need to have the wp-content/blogs.dir folder owned by nobody, your normal account should be just fine for this. Try putting the permissions to 777 for all folders in blogs.dir.

I changed the ownership back to my user/group, and permissions to 777. I can upload media now, however, is this a security hole? What should the permissions be set to?