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syntax for interactions in lme

Correct, for the interactions write:

random = ~ host | sire/dam

an interaction between a fixed and a random term can be interpreted as a
variability in the fixed term for the different levels in the random term.
Thus the 1 (which stands for the intercept) is exchanged with the fixed
effect(s) with which interactions are of interest.

This is easy if all the hierarchical levels of a nested random effects go
into an interaction it is a bit more complicated if not. Say you only want
the interaction of host and dam but not sire:

random = list (~ 1 | sire, ~ host | dam)

Hope this helps (it can all be found in Pinheiro and Bates and on the help
pages).

Lorenz