I just watched Sharon Zambito's DVD on Fondant. She uses a stiff buttercream to pipe her dam before adding filling. I have been using Extra Special Buttercream recipe and love it. How do you make it stiff without it tasting like powdered sugar?

You don't. Honestly, the dam is such a small amount of icing in comparison to the icing on the rest of the cake, so you're not really going to notice the extra ps taste much.