I already reported this bug and it’s fixed in the latest svn version. So if you need to work with AVHosting and this rule you better checkout from svn and compile on your own instead of using any precompiled packages.

But I guess in further versions the bugfix will be included.

First put your CakePHP files into any directory. For me it’s /home/daniel/Web/dcms
You can delete all the .htaccess files:
/.htaccess
/app/.htaccess
/app/webroot/.htaccess

Add a new virtual host to cherokee, set the document root to the CakePHP webroot:
/home/daniel/Web/dcms/app/webroot
Directory Indexes should be set to index.php

Add a new PHP rule – with the new wizard it’s really simple – and keep the default settings.
Add a new ‘file exists’ rule and let it match ‘Any File’ and handle it as ‘Static Content’.

How we need to modify the default rule. Change the handler to ‘Redirection’ and setup the regex like this:

(Internal, ^.*$, index.php)

That’s it!
Just make sure that the rules are in the correct order (php, any file, default):

Just save and access CakePHP via your defined domain.