To all the user directories you want web access too. You need not only read, but execute.
edit: okay make a script called webuser or something and chmod +x it
I made this little script so users with webpages could be added to one of the college's system, I think it will work for you too.
#!/bin/bash
/usr/sbin/useradd $1
chmod 701 /home/$1
chmod 751 /home/$1/public_html
passwd $1
So to recap, open a text editor, paste in the contents, save it to say /usr/sbin/webuser then run "chmod +x /usr/sbin/webuser"
Now as root type "webuser paulson"
It will ask you for the password and I think the permissions will be set right for you.
edit again: Just to clarify, this will add a new user with web page permissions set right, if you want to modify an existing uer for this you can use the same script without the useradd and passwd lines.