I would look at getting Lightroom. You'll most likely find that the vast majority of your editing can be done right in Lightroom which is based on the Adobe CameraRAW engine. For anything more two clicks opens the image in an external application of your choice.
Basically there is no way to open a RAW file in Photoshop 7. As for the desire for 1 application. Basically you don't get that option at all in Photoshop. You always need something (most commonly the CameraRAW plugin) to process the RAW file after which it becomes a standard image and you lost the ability to do all "RAW" part of the process again. Therefore there really is no difference to opening a photo in Photoshop, or opening a photo in Lightroom, or another RAW converter that integrates with Photoshop. You'll always have 2 separate windows for doing tasks on RAW, unless you don't need photoshop for a particular image and are happy just editing in the ACR window, or the Lightroom window, etc.