Well, first I am sorry if I was not clear but my ultimate purpose is not to compile gcc. All I want is a C compiler that actually runs.
Installing Xcode ought to give you this. If it doesn't, then you're already screwed. As you've discovered, you can't compile gcc without a C compiler!
Are you suggesting that for ANY program, configure should be ran from a different folder than its source's? Or does your suggestion only concerns gcc's source compiling?
Only gcc (well, and binutil and a few other packages, but it is not true in general).
I don't really understand why you are trying to build gcc --- when you installed Xcode, did you not have a functional copy of gcc come with it?
Niko