IPhoto issues editing Raw files in PE4

I've just acquired Photoshop Elements 4 and was happy at the prospect or keeping my photos in iPhoto and editing them in Elements.
I mostly shoot in RAW format but when editing a RAW file in Elements I can't get the edit to show up in iPhoto (version 6).
On the other hand when processing jpegs from iPhoto to Elements the edits show up fine back in iPhoto.
Is the problem with the format change when converting RAW to Jpeg I wonder?
I did notice that when saving the edited RAW file -and choosing Jpeg as the new format- iPhoto defaulted to the "Original" not the "Modified" folder for the save. Couldn't iPhoto determine that the file has been modified? Is that because the extension was changed?
I also tried saving and manually selecting the MODIFIED folder but with unhappy results. The edit did show up, and in it's proper place, but when viewing in "full screen" mode the image resorted back to the unedited version after 3 or 4 seconds. I tried that a couple of times with the same results...!? I hope I didn't corrupt anything in the process!
I realise I could just do a "save as" to my desktop and import back to iPhoto but that creates a double and also a new roll for each import...
I haven't seen any posts about this. Has anyone had the same problem, or am I missing something elementary?
Thanks for any feedback.
KiwiP
PowerMac G4 FW800   Mac OS X (10.4.8)  
PowerMac G4 FW800   Mac OS X (10.4.7)  

iPhoto is a consumer-level application, and RAW is a format mostly for professionals. When you import a RAW file into iPhoto it saves the RAW in the Originals folder and instantly creates a jpeg version of it in the Modified folder. This causes the problem with your editing workflow.
Yes, changing the file extension in Elements is the same as doing a Save As - it breaks the link iPhoto has with the original. This is why you don't see your edits back in iPhoto. Any time you change the extension you will need to save as to the desktop and import the edit as a new original into iPhoto. As you've seen, you cannot save directly into the iPhoto library folder because images must be Imported for iPhoto to recognize them. If you know which files you placed in there, go ahead and drag them out (using Finder) to your desktop. Then import. (Be careful not to tamper with anything else in the library folder while you're in there.)
My suggestion for your RAW workflow is to use Image Capture (in your Applications folder) to upload from your camera (to a folder anywhere outside of your iPhoto library folder). Edit in Elements. Last, import into iPhoto. Once inside iPhoto, the desktop copies can be deleted. You can set Image Capture to open when you connect a camera in Image Capture Preferences.
iPhoto does create a new roll each time you import photos, but you can always reorganize your rolls. Choose Library and View > Sort Photos > by Film Rolls and you can combine, create, retitle, and redate your rolls. For example, you could keep separate rolls for files with a RAW original versus files imported as jpegs.

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