OK, I've done a lot of research into this now, and I believe I can explain how twmm's one-line fix works, since this seems to have confused a lot of people and wasn't explained very clearly. I believe that the fix does basically work, with a few minor problems.
This fix alters the way timestamps are written as text. It does not affect the timestamps themselves, or the posts in your database. It is purely a visual display change.
It uses the server's OS information about the DST rules, so you'll get different behavior depending where your server is located. In the US, it will follow US DST rules. In other locations, it will follow the local rules for DST, assuming the server's timezone info is configured correctly. For a server in a location that does not observe DST, the fix will do nothing at all.
For all timestamps that are within the DST range, 1 hour is added to the timestamp when converting it to text. Note that the decision is based on the stored timestamp, not the current time. This is important when viewing an old topic from January during July.
If all your board's users follow the same DST rules as the server themselves, then they'll see their times adjusted automatically, and everyone will be happy. So if your board is primarily of local or national scope, this will probably be fine. But for any user who follows different DST rules or does not observe DST at all, their times will be adjusted incorrectly, and they will be confused and annoyed. It's probably best to add an option in the user control panel to let people choose whether their time display should be adjusted.
One other problem is that the text "All Times are GMT - 8 hours" will not be changed, even though it's no longer correct. Changing the hour in that text by 1 isn't correct either. The reason is that all times are no longer displayed in any single GMT offset, but instead use different offsets depending on the date of the post. You could maybe change it to say something like "All Times are GMT - 8 hours (winter) / GMT - 7 hours (summer)", or use the common timezone name like "All Times are Pacific Time".
One last note: the often-repeated suggestion about changing everyone's timezone setting for DST is not just cumbersome, it's also plain wrong. It will cause the time to be displayed correctly on recent topics, but if you go back and read a topic from six months ago, all the times will have changed by one hour. You cannot correctly compensate for DST with a simple timezone change.