When making a print that challenges the resolution of your digital camera, is it better let photoshop interpolate and set the output to 360 dpi OR am I better off printing with a lower output to say down to 180 dpi so photoshop does less interpolation? OR does it make much difference at all?

There really is no better way to find this out than to run a test yourself.

I am among the very last ones, who should give advice in printing issues, but I think that not all inkjets work in multiples of 180 or 360 dots (I think Epsons do always). Btw, this is 180ppi, not dpi. Even if printed on silver halide, the "ideal" resolution depends on the printer; for example the printing service I am using has certain Noritsu models working @ 300ppi up to 36" length, then @ 150ppi.