I've spent the past 2-3 weeks trying to resolve this issue without any real luck. I'm partially giving up but... I have found a replacement solution. Visit http://www.phpguru.org/smtp.html and there is a PHP CLASS file that writes directly to a SMTP mail server. This script works fine with smtp.mac.com. I'm going to recommend it to anybody who needs to use PHP mail (not the mail() function) with smtp.mac.com. Like I said, it works great.
Back to my partially giving up. I'll keep my eye open for a real solution to using PHP's mail() function with sendmail built into OS X. Perhaps it will be in OS X 10.3.