Being that I currently have 4.1 using for D50 and works fine with CS2
Seing that 4.6 not working with CS2 because it's surprased it to above and beyond CS3, shouldn't there be something in between somewhere we (mostly I) can reach a happy medium ...4.3, 4.33, 4.44, 4.5???
You are confusing TWO DIFFERENT THINGS!
DNG Converter doesn't use ANY version of Photoshop to convert raw files to DNG....if you convert a raw file to DNG you can open it with Photoshop CS using Camera Raw 2.4 or CS2 using Camera Raw 3.7 or Photoshop CS3 using Camera Raw 4.6 or CS4 using Camera Raw 5.x.
The Camera Raw plug-in for Photoshop is CR 3.7, the last update with CS2 which will open any DNG made with any DNG Converter including DNG Converter 4.6 (which is what I told you to download–which also comes with Camera Raw 4.6 which you can throw away since it won;t work with CS2).
So, not sure what else I can tell you...DNG Converter is a free, non-version specific method of converting raw to DNG so earlier versions of Photoshop can use it. And no, you can't upgrade to CS3 since CS4 is shipping, CS3 is no longer for sale (except for used or old inventory).