how are you getting around the problem that there are no android 1.6 libraries for the hero? Telephony shouldn't work, camera won't work, I don't even know that screen will work.
Oh, the screen is indeed working?
change the DPI back down to 120 so you can use it. It will suck, I know, because our screens are 160 dpi, but at least all will work as intended.
Best reference thread ever: Learn to compile your own AOSP build
(for sapphire, but applies to dream too)