From the page that I linked to:
Originally Posted by barjohn
"The Camera Raw 5.2 plug-in is not compatible with versions of Photoshop earlier than Photoshop CS4 or versions of Photoshop Elements earlier than Photoshop Elements 6."
If you want to open the RW2 files in Photoshop directly without first having to go through the DNG conversion, you'll need to upgrade to Photoshop CS4.
I really don't like how Adobe abandons support for the latest version of the ACR plug-in for older versions of Photoshop, but at least with the latest version of their DNG converter, you can still access the G1 RAW files with these earlier versions of PS/PSE. The resultant DNG files will be huge, but hopefully Adobe/Panasonic will rectify this soon.
In back alley's case, he mentions that he has PSE 6 for Mac, so the instructions for manually installing the ACR 5.2 plug-in should work--he won't need to convert to DNG at all.
I have Photoshop Elements 4.0.1 and am going the DNG conversion route for now because I refuse to install and learn another program such as Silkypix. (I've heard that its interface is very clunky.)
I see you have Lightroom 2.2 as well. I'm not familiar with the program. Is it meant as replacement for Photoshop, or as a supplement?