Sorry, I need to clarify.
I am not worried about the 404 msg. I am worried that wordpress rewrite rules are applied server-wide, and not just constrained to the /wordpress directory
I tried changing the rewrite rule to
RewriteRule ^/wordpress/.*$ /wordpress/index.php [L]
Also tried
RewriteRule ^/wordpress/(.*)$ /wordpress/index.php [L]
And finally,
RewriteRule ^(.*)/wordpress/(.*)$ /wordpress/index.php [L]
But none of them worked.