In mojoportal you could create a top level page for a user and give that user both edit permission and create child page permission on that page and the user can edit this page and create as many pages beneath it as he wants, but the page would be an url like http://somesite.com/joe.aspx and there is nothing automatic to create it for new users so you would need to implement your own solution for that.
As for Url re-writing, it takes more than just url re-writing to achieve hostname style urls like http://joe.somesite.com because host names require a DNS "a" record to resolve the host name to an ip address. So until you add he DNS a record on your DNS server(s) and until it propagates around the world the hostname joe.somesite.com will not resolve to the ip address of your IIS server and therefore IIS will not get the request. And if the IIS is running more than 1 web site on the same ip address you would also need to add a host header to IIS for each new host name so that it knows which site that hostname maps to. Those configuration requirements will not be an easy problem to solve in an automated way.
VirtualPathProvider is not for url re-writing, its for locating physical files from a virtual folder location.
Hope it helps,
Joe