Yes, dermpath is UNBELIEVABLE competitive. Example: Last year, 100 Board Certified dermatologists/pathologists competed for 7 fellowship pos. at the Ackerman Academy of Dermatopathology... I think they accepted ONE IMG.
There's a neverending debate about wether derm or path is the best background, and honestly both have advantages and drawbacks. Regardless, it's certainly necessary to convincingly demonstrate top notch training and ability in either. Perhaps check out the background of the PD, as - all other things being equal - a path PD probably prefers a path, while a derm-trained PD prob. thinks that derm background is best. Also note, that since the core of dermpath is determination of malignancies, it's probably not good to have a derm background focused on cosmetic derm, because it's really looked down upon by dermpaths, in my experience.
Getting a residency at a place that offers dermpath is prob. a good idea, because depts. approved for dermpath fellowships are usually large and well-regarded, have an interesting dermpath caseload you can lay your eyes on, and gives you the ability to schmooze the dermpaths working there.
Also note that both derm and path traditionally LOVE research, so serious first authorships are close to mandatory, along with evidence that you aced the boards. And as noted above strong LOR's/contacts among dermpaths are a def. advantage. It's a pretty small close-knit community.
Unfortunately, the advice posted above about discouraging other applicants is unlikely to work. Fact is, that dermpaths prob. on average aren't among the highest paid MD's. But they have far and away the best working hours. Most everyone can live quite comfortably working 40 hrs/week, and most cases can be signed out wearing a blindfold
Good luck!