RewriteEngine is not allowed with dynamic <Directory> - apache

Question

I currently have a variable host setup using dnsmasq on OS X 10.14. My base folder is ~/Sites. I can have a folder ~/Sites/{whatever} which I can load via http://{whatever}.test/. I am trying to use mod_rewrite for one of my projects, but RewriteEngine is not allowed for some reason.
I have my httpd-vhosts.conf file setup like so:
<VirtualHost *:80>
VirtualDocumentRoot "/Users/{Username}/Sites/%1"
ServerName sites.test
ServerAlias *.test
Options Indexes FollowSymLinks
<Directory "/Users/{Username}/Sites/%1">
AllowOverride All
Require all granted
</Directory>
</VirtualHost>
and my .htaccess file like so:
RewriteEngine on
RewriteCond %{REQUEST_FILENAME} !-d
RewriteCond %{REQUEST_FILENAME} !-f
RewriteRule ^read$ read.php
RewriteRule ^read/$ read.php
RewriteRule ^read/([\w\s]+)$ read.php?s=$1
RewriteRule ^read/([\w\s]+)/$ read.php?s=$1
RewriteRule ^read/([\w\s]+)/(\d+) read.php?s=$1&p=$2
It doesn't matter what I have in my .htaccess file, as long as RewriteEngine On is there it errors out.
While using %1 in my Directory tag I get the following error:
/Users/{Username}/Sites/reader/.htaccess: RewriteEngine not allowed here
I can't seem to find a way around this without hard coding the directory, but that defeats the purpose of the variable host setup.
If I do hard code the directory the site works just like it should - so everything else is working.
Solved
I managed to figure it out.
In my httpd.conf I had this:
#<Directory />
# AllowOverride none
# Require all denied
#</Directory>
Notice the commenting out.
I changed it to this:
<Directory />
AllowOverride All
Require all granted
</Directory>
and it now works.

Answer 1

<Directory "/Users/{Username}/Sites/%1">
%1 is not valid syntax here. I don't think you necessarily need to be specific, as the directory being accessed is already controlled by the (virtual) document root. So, you could, in theory use the <DirectoryMatch> directive instead and providing it matches the appropriate directory pattern it would be sufficient.
HOWEVER, the AllowOverride directive is not permitted in <DirectoryMatch> containers, only in non-regex <Directory> containers, so this would restrict you to do something like the following as a workaround:
<Directory "/Users/{Username}/Sites">
AllowOverride All
</Directory>
<DirectoryMatch "^/Users/{Username}/Sites/[a-z]+">
Require all granted
</DirectoryMatch>
[a-z]+ will match "reader".
UPDATE:
I changed it to this:
<Directory />
AllowOverride All
Require all granted
</Directory>
and it now works.
This enables access to the entire server - which is undesirable (and the Apache docs specifically warn against doing this for security and performance reasons.)
You should be as restrictive as possible - as above (which is the idea behind using the restrictive <Directory> container inside the vHost in the first place).