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No, I'm afraid that is not quite going to solve your problem. Although there was at one time a raw converter for Photoshop 7, it is no longer available anywhere. And even if it was, it only supported a very few cameras that were available at the time. Photoshop 7 was right at the beginning of the raw era, and what little support for raw that was there was very rudimentary.
With the camera that you have, I would suggest that you either purchase Photoshop CS3 or Adobe Lightroom. Adobe only provides updated raw support for the current version of Photoshop, the later versions of Photoshop Elements, and Lightroom. The only way you can assure that you have the latest/greatest raw capabilities from Adobe is to make sure that you have the current version of the software.
You may be aware of Photoshop Elements. It is a good photo editor, and it utilizes the same Camera Raw plug-in that is used by Photoshop. However, a good number of the features that are available in Photoshop/Camera Raw are not available when using Photoshop Elements. You have an awesome camera. You should spring for a new version of Photoshop or for Lightroom if you want to take full advantage of your camera's raw capabilities.
Just in case you want to consider upgrading to CS3, Ps7 happens to be the oldest version the upgrade will support. Altho I'm an Oly user myself, and am very happy with the current version of ACR, although I've paired Lightroom with CS2. Lr is also very good, but it'll cost as much as the CS3 upgrade.