You shouldn't need to chroot apache to avoid serving /etc/passwd. I have never worked on a site with chroot'd Apache, and have never run into these kind of issues.
Are you setting your Apache configuration to only allow reading certain directories?
Are you setting your Apache configuration to only allow reading certain directories?
Disabling shell functions (system, exec, etc.) is also a good idea, unless the application itself requires them (e.g. if the host is too stupid/lazy to have the imagick extension installed and tells you to call /usr/bin/imagick instead...).