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PSD and other graphics files are fairly universal. You can open them with any version of Photoshop or Photoshop Elements.
With Premiere Elements, it's a bit iffier. Some people have opened old version projects in version 7 with no problems, while others have had issues.
I'd recommend finishing your version 4 projects in version 4 (at least to a point) and then using File/Export/Movie to output an AVI of your finished work, which you can then import into our version 7 project.
>Also, will Photoshop Elements 7.0 import my Photoshop Elements 3.0 Collections (as created) or will I have to re-Tag my photos as well as organize them into Collections again?
In general I think that your PSE 3 tags and collections will be carried forward when your catalog is upgraded from PSE 3 to PSE 7. What were "Collections" in PSE 3 will become "Albums" in PSE 7.
Now it is very important that in the PSE 3 Organizer BEFORE your catalog is upgraded, you do
-- Reconnect All Missing Files
-- Catalog Recover
These commands are available from the File menu of the PSE 3 Organizer. They "clean up" your existing PSE 3 catalog and a clean catalog can avoid many potential problems during the upgrade process.
You did not ask about any "Creations" in PSE 3 and I do not think the Creations (Slide Show or Photo Book is an example of a creation) will carry forward from PSE 3 to PSE 7. So it is good if the info that you do need is the PSE 3 Collection rather than a PSE 3 Creation.
Here are some Adobe techdoc references about upgrade to PSE 7 Organizer
and in general I would scan the list of top issues techdocs at
The 2 I suggested above are on that list.
Be aware that the format and folder locations of the PSE catalog changed significantly between PSE 5 and PSE 6 (the 1st techdoc discuses this), so as you are migrating from PSE 3 to PSE 7 there will be some difference and how much you notice differences may depend on how deep you went in to PSE 3. The second techdoc, which discusses placing the PSE catalog in a non-standard folder location is one example of such a case. I say this not to scare you, but instead to make you aware of the potential for differences if there is initially a glitch in the upgrade process on your system.
Also, I strongly recommend that you give the PSE upgrade part of your question broader exposure by posting it over on the Photoshop Elements forum in the Technical Issues subforum at