I'm trying to decide the best way to archive my pics before any touching up is done. Should I save them directly in CR2 or should I open then in RAW and then save as a DNG? my questions are, if I save them as DNG, do I lose ANY data from the original raw file or is it as editable as it is in the original CR2 format? Also I notice when I open files in camera raw some basic settings are applied, I want to see the original raw file open completely "as shot" how do I get it to do that? should I just set all the settings to "0" or flat and start from there? and if the basic adjusmtments are applied when I open a raw file, (ie. +50 contrast, +5 blacks etc) when I save as a DNG is the file then changed to those settings? Thanks for all the help!
The first thing I want to point out is that any changes you make to either a RAW or DNG image are made nondestructively. You can always clear the camera raw settings and start over. Personally, I don't see any benefit to making some changes to the original RAW image and then converting to DNG to finish the work. There doesn't seem to be any benefit to doing that. I have compared the two image formats and find that I can get identical results from either one.
Depending upon how you have Camera Raw configured, it might be applying automatic adjustments to your images. You can press Cmd/Ctrl+U to turn that feature on or off. Also, you can designate in the configuration menu whether or not you want to use the automatic settings. I understand however, that is a little different in Camera Raw 4.0.
One of the first thing you should do with Camera Raw is make adjustments to an image so that it looks the way you want it to look, and then save those settings as your new Camera Raw Defaults. Then, with the Auto adjustment turned off, when you load the images into Camera Raw they should generally look the way you expect them to look. There is a lot to learn about using Camera Raw. Here is a link to one of the finest books on the subject if you are using Photoshop. If you are using Photoshop Elements I don't believe the book would help you as much because many of the features are not available.