I had a similar problem. On changing the the permalink structure I received the 403 error and was unable to access any of my site (as by now I had put WP in the root).
Once I deleted all the WordPress additions in the .htaccess file I was able to access the site again and the admin pages. However, I had to change the permalink structure back to the default (blank) as the links for my posts were wrong.
Any further attempts to modify the permalink structure, other than to the default, seems to result in the same 403 error.
Did you guys manage to resolve the issue? I would really like to use permalinks.