Saving edited RAW files in iphoto

Hi I have searched the forum but cant find an answer that works for me and I have also read this
http://http://barbarabrundage.com/2010/11/29/using-photoshop-elements-9-with-iphoto/ 
Basically I am opening my Raw images in PSE 10 as my external editor from Iphoto 11. My question is what is the best way to save it back to iphoto?
I have tried the instructions in the above link and set PSE 10 to 'save over current file' in the savings preferences but when I clicked save image after editing in camera raw it opened the save as menu
Should I click on open image from camera raw to open in the editor and then save it from there for it to update in iphoto? I clicked open image for an edit yesterday then saved to desktop as a psd file and imported to  iphoto which worked
Apologies I am very new to this, any help would be great
Chris

Ok thanks, is there any way to keep the format of the file then and save into iphoto as per the linked article? Would I have to keep it as a NEF file??
Also when I've edited a Raw photo if I am going to save it to desktop and import it back to iphoto what file type should I be saving it as? I used  PSD last time is this right?
One final question when should I be saving files as DNG as this is what the book I am reading refers to but i dont know if these can be saved to iphoto or what their purpose is
Thanks again

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