Is there no way to update Camera Raw in Photoshop CS3 so I can open RAW photos taken on the 7D? From what I am understanding, Adobe only is doing recent updates for RAW support for CS4? Hopefully that's not the case, and I wanted to know if anyone knows of a workaround other than using the DNG converter.

You should really try DPP that came with the camera. It really does a good job, and at this point the best job of handling RAWs from the 7D.