I'll describe the problem my .htaccess file caused on my WordPress site, in case that's useful for anybody else who comes along searching for information.
I made a new .htaccess file in order to forward one URL to another, and uploaded that .htaccess file. Suddenly my site was full of 404 errors! Clicking just about anything on my site: category links, permalinks, archive links - all led to 404 errors.
I didn't realize that WordPress adds info to the bottom of an .htaccess file. When I uploaded my new .htaccess file, I overwrote/erased the mod_rewrite stuff WordPress had added, and that's what broke my site.
This post helped me to understand the problem and to fix it. I renamed the .htaccess file on my server to something else, then put a blank .htaccess on the server instead. Then I updated the permalink structure from within WordPress 2.0. (Permalinks >Update Permalink structure) Problem fixed! Whew.