I guess the difficulty is that home directories are not publicly executable in your environment.
You can put an access control list on all home directories that gives a particular user or group execution permission to the directory. The web server will then potentially be able to access any file in users' home directories, which may provide ways to escalate privileges (at least, this will broaden the impact of a local file access vulnerability). For example, under Solaris or Linux, make sure the home filesystem is mounted with the acl option, and run
setfacl -m user:www-data:x /home/*
(integrate that into your account creation setup). Then tell your users that their ~/public_html directory must be readable by the www-data user; they can run this command:
setfacl -R -m default:user:www-data:rx ~/public_html setfacl -R -m user:www-data:rx ~/public_html
Another possibility is to mount all the users' public_html directories in a separate place on the filesystem. This approach has the advantage that the permissions on the home directories won't matter; it even allows the web server to run chroooted. Under Linux, you can do this for a home directory:
mount --bind /home/joe/public_html /srv/homepages/joe
The public_html directory and its contents still need to be made accessible to www-data.
A variant on the Linux bind mount method uses the bindfs filesystem. This method works on any OS that supports bindfs (which is most unices) and does not require any ACL settings, at the cost that any file under public_html will be made available for reading by the web server.
bindfs -u www-data -p 500 /home/joe/public_html /srv/homepages/joe