Wildcard sub-domains are definitely possible using Apache virtual hosts.
I had basically the same requirements and managed to get it working with Apache's mod_vhost_alias.so
module. Try this in your http-vhosts.conf
file:
DocumentRoot "/home/admin1/public_html/userweb/"
<Directory "/home/admin1/public_html/userweb/">
Options None
AllowOverride None
Order allow,deny
Allow from all
</Directory>
<VirtualHost *:80>
DocumentRoot /home/admin1/public_html/
ServerName www.example.com
</VirtualHost>
<VirtualHost *:80>
VirtualDocumentRoot /home/admin1/public_html/userweb/%1.example.com/
</VirtualHost>
<VirtualHost *:80>
DocumentRoot /home/admin1/public_html/
ServerName example.com
</VirtualHost>
Note that I haven't tested this, but it's pretty close to the solution that worked for me.
Full details of my solution are here: http://www.calcatraz.com/blog/wildcard-subdomains-in-apache-1422