Make subdirectory WP installation appear as domain root?

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I think this is should be possible. The goal is to make a WP installation for DOMAIN2 in a subdir of DOMAIN1 function as its own independent website (top-level site and page URLs, etc.).

1.) Created a new WP installation at [http://DOMAIN1.com/NEWDOMAIN/]) Added content and tweaked theme to use as website for [NEWDOMAIN.com])

2.) Repointed DOMAIN2’s nameservers to DOMAIN1 hosting company

3.) Calls to [DOMAIN2.com]) are resolved to [DOMAIN1.com/NEWDOMAIN/]), as expected. However, they do not fully load CSS styles on first call, only. Also, address bar shows [DOMAIN1.com/NEWDOMAIN/]) instead of [DOMAIN2.com]), as desired.

4.) Navigation to other pages/posts on the site and back to home page work as expected (with full CSS styling).

I would like the address bar to display [DOMAIN2.com]) at the homepage and [DOMAIN2.com/page]) and [DOMAIN2.com/post]) URLs while on the site. What am I missing here?

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