First off, WordPress is installed in /Users/jameshiggs/Sites/blog. Leopard comes with Apache 2.2 installed, but has PHP disabled by default. To correct this, go to the console and change directory to /etc/apache2 and open httpd.conf in your favourite editor. For me this means typing:

sudo mate httpd.conf

You’ll probably have to enter your admin password. Find the line that reads:

#LoadModule php5_module libexec/apache2/libphp5.so

and uncomment it so that it looks like this:

LoadModule php5_module libexec/apache2/libphp5.so

Next, we need to make sure that your user directory allows .htaccess rules. To do this, create a file called jameshiggs.conf (obviously, you’ll need to replace my user name with yours) in /etc/apache2/users. The contents of that file should read:

<Directory "/Users/jameshiggs/Sites">
	Options Indexes MultiViews
	AllowOverride All
	Order allow,deny
	Allow from all
</Directory>

Again, you’ll need to replace my user name with yours.

The final piece of the jigsaw is to configure WordPress to use friendly URLs – which you do from the Options > Permalinks page. I’ve selected the second option which makes URLs look like this: http://localhost/~jameshiggs/blog/2007/12/25/sample-post/. If WordPress can write to the site root then it will automatically create the .htaccess file. If not, you’ll need to create it yourself in the root of your blog site. On my machine, the file should look like this:

<IfModule mod_rewrite.c>
	Options +FollowSymLinks
	RewriteEngine On
	RewriteBase /~jameshiggs/blog/
	RewriteCond %{REQUEST_FILENAME} !-f
	RewriteCond %{REQUEST_FILENAME} !-d
	RewriteRule . /~jameshiggs/blog/index.php [L]
</IfModule>

Finally, you need to restart Apache – the easiest way to do that is to go to System Preferences > Sharing panel and untick Web Sharing. Once Apache has stopped, tick it again and Apache should start up. And that’s it.

Let me know if you have any variants to this procedure.

Thanks to Bagelturf and Ariadoss for hints that helped me get this running.