Even as an ardent Mac fanatic since 1984, I have to tell you that iPhoto is an unmitigated piece of cr@p when it comes to image quality, though it has certain hand-holding features that make it very attractive to photo amateurs.
The raw conversion, whether from a straight raw file or from a raw DNG file, will be far superior if you view them after converting/rendering them in Adobe software, either Lightroom or Adobe Camera Raw. The latter, a free plug-in, can be hosted either by the (very expensive) full version of Photoshop, or by the relatively inexpensive ($99.99) Photoshop Elements, although when hosted by Photoshop Elements it only offers a subset of the controls, adjustments and functionality of the very same plug-in when hosted by the full version of Photoshop.
…a Zeiss Photoscope (in effect, a spotting scope with an integrated camera) which records raw images as either JPG or DNG files or both…
Incidentally, only the DNGs are raw files in that scenario. JPEG is a lossy compressed format generated in camera by the manufacturer's buiilt-in software, and compressed after the raw data has been rendered and demosaic'ed ("cooked"), so it is no longer raw in any sense of the word.
You should be getting substantially better quality from the DNG files than from the lowly JPEGs. Did Zeiss supply their own raw converter with your photoscope? If so, that should be far superior to the iPhoto converter.
Before buying any new software, check the exact nature of the DNG generated by your photoscope. If Zeiss is giving you a lossy compressed DNG, then a deterioration in quality relative to the JPEG would be expected. Check the camera settings to make sure that they're set to give you a truly raw, non-lossy DNG in the first place.
It is well within the realms of conceivability for your JPGs to be better quality straight out of camera than the DNGs; JPG is a processed image while the DNG is not.
DNG and other raw files are not necessarily better quality as-is. Rather, within them is immense potential for far superior quality which can be unlocked through the use of manufacturer/3rd party software.