Kodak Photo CD conversion issues

The Kodak Photo CD seems to be obsolete these days, but I have a number of old Photo CDs from years ago, so I have an interest in converting the files to some other format in the best way possible. In trying to do so with Photoshop CS2, I've noticed some issues:
1. Highlights are washed out. This is not so bad when the highlights are in the sky and I just lose some cloud detail, but it's quite unpleasant when the highlights are in people's faces. When I try converting the files with Paint Shop Pro, results look somewhat inferior in other ways, but there's more detail in the highlights, so this seems to be a Photoshop problem.
2. Photoshop provides the option of 16-bit colour when importing from Photo CD, which looked good to me, so I used it. I've only just realized that, as far as I can tell, the Photo CD images contain only 8-bit colour information, so I've just been wasting space by saving large TIFF files with 16-bit colour. I wonder why Photoshop provides this useless option! Or does it have some purpose unknown to me?
Has anyone found a good way of converting Photo CD images that doesn't wash out the highlights?

Hello Gernot, thanks for your reply.
Yes, I've seen the Ted Felix site, downloaded his DLL, and used it with Paint Shop Pro. Unfortunately, although it does preserve more of the highlights, in other respects the Photoshop conversion looks better.
As you say, it seems that it would be possible for an intelligent conversion tool to convert a standard PCD image to a TIFF with genuinely useful 16-bit colour. Unfortunately, no-one seems to have produced such a tool. I tried asking here just in case anyone has found a better solution than the ones I've tried.
I get the impression that Adobe merely bundles the conversion tool provided by Kodak without attempting to correct its defects or even to document it properly (the Photoshop help says very little about it).
Although PCD is more or less a dead format now, there must be lots of old Photo CDs at large in the world, and quite a few people interested in converting those images. I suppose most people innocently convert the images with whatever tool they have, and wrongly blame the PCD format itself for the imperfect results they get.

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