^ Given that it took a year and a half for the Dominion's name to start vaguely appearing it suggests they weren't terribly close to the wormhole at all. If they did control the space around the wormhole their presence should have been pretty much immediately noticed.
Didn't Sisko say something to one of the Founders or Vorta about the Federation had every right to explore inside the Gamma Quadrant? The Dominion didn't want the Federation in the Gamma Quadrant at all. Which led to the destruction of every Federation ship entering the wormhole through the Gamma Quadrant.
I think it was Dax who said something along those lines when the Jem'Hadar arrived with the Dominion's unreasonable ultimatum.
Actually it didn't lead to the destruction of every ship entering the GQ. The Dominion sent an ultimatum and didn't enforce it, traffic was going both ways for years to come.
The Cutest of Borg wrote:
War could have been averted if the Feds had stayed on their side of the wormhole.
That I don't agree with. The only way war would have been averted is if the Federation closed the wormhole as soon as the Dominion revealed itself. The Dominion's ultimatum to that everyone stays on their own side is meaningless given they were at the same time trying to infiltrate Eris into the Federation.
If the Dominion were serious with their ultimatum they would have interdicted the wormhole with a minefield as Sisko did or with ships. However, they didn't. By all accounts they gave the wormhole a wide berth and let the Federation and other AQ groups go about their business in the GQ.
I suspect they did so to avoid the situation that occurred in "In Purgatory's Shadow". Any type of significant military activity near the wormhole would spook the Federation and they would close the wormhole. This would cut the Dominion off from several powerful threats they will only continue to grow as threats as time goes by. At that point the Dominion has a number of significant advantages over the regional powers in and around the Federation. Without the wormhole it might be several decades until they next meet and the Dominion's advantage might have evaporated in that time and it could be faced with large powerful empires run by solids that cannot be brought to order. It also aids the Dominion for traffic to remain travelling through the wormhole. It allows them to get Founders in and out as well as brings in enemy vessels that they can periodically prey on for information.