Photoshop elements

My .psd photos don't show up in iPhoto — just an error message that says "Photoshop 3.0 Is Required to Open This File" — in several languages. I have fixed my preferences so that my pix sucessfully open in Photoshop Elements; should I just put up with the fact that I cannot see the thumbnails within iPhoto?
Sincerely,
George From Palms
G4 tower   Mac OS X (10.4.10)  

The color mode is RGB color.
There are no Alpha channels
I can open them both in their original location and via iPhoto (I've set iPhoto to open all my files in Photoshop Elements).
Do you have the Maximize PSD File compatibility set
to Always in the Saving Files Preferences section?
Yes, I do.

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