To edit photos in iPhoto set Photoshop as the external editor in the iPhoto preferences - when you edit a photo it will open in PS - when finished save (not save as) and PS will return the photo to iPhoto and correctly update the iPhoto database
iPhoto has the capability to directly interface with any external editor - simply go to the iPhoto preferences (iPhoto menu ==> preferences ==> General and set the Edit photo option to in external editor - select the desired external editor and you are set - now when you edit photos they are sent to the selected external editor and when you are finished editing you save (not save as) and the edited photo is returned to iPhoto, the original is maintained in iPhoto and the iPhoto database is correctly updated.
If you want the option of editing in either iPhoto or the external editor after selecting your external editor simply set the edit in back to main window - now when you right click (control Click) on a photo you will get a menu which allows you to select either.
Note that you never make any changes directly to the contents of the iPhoto library including never saving any photos into it other than using the external editor feature
Since iPhoto 7 (iLife 08) the old iPhoto Library Folder is a Package File. This is simply a folder that looks like a file in the Finder. The change was made to the format of the iPhoto library because many users were inadvertently corrupting their library by browsing through it with other software or making changes in it themselves.
Accessing the files in the iPhoto Library directly has never been supported on any version of iPhoto.
As Larry says:
You can set Photoshop (or any image editor) as an external editor in iPhoto. (Preferences -> General -> Edit Photo: Choose from the Drop Down Menu.) This way, when you double click a pic to edit in iPhoto it will open automatically in Photoshop or your Image Editor, and when you save it it's sent back to iPhoto automatically. This is the only way that edits made in another application will be displayed in iPhoto.
As an FYI:
There are many, many ways to access your files in iPhoto: You can use any Open / Attach / Browse dialogue. On the left there's a Media heading, your pics can be accessed there. Command-Click for selecting multiple pics.
(Note the above illustration is not a Finder Window. It's the dialogue you get when you go File -> Open)
You can access the Library from the New Message Window in Mail:
There's a similar option in Outlook and many, many other apps. If you use Apple's Mail, Entourage, AOL or Eudora you can email from within iPhoto.
If you use a Cocoa-based Browser such as Safari, you can drag the pics from the iPhoto Window to the Attach window in the browser.
If you want to access the files with iPhoto not running:
For users of 10.6 and later: You can download a free Services component from MacOSXAutomation which will give you access to the iPhoto Library from your Services Menu.
Using the Services Preference Pane you can even create a keyboard shortcut for it.
For Users of 10.4 and 10.5 Create a Media Browser using Automator (takes about 10 seconds) or use this free utility Karelia iMedia Browser
Other options include:
Drag and Drop: Drag a photo from the iPhoto Window to the desktop, there iPhoto will make a full-sized copy of the pic.
File -> Export: Select the files in the iPhoto Window and go File -> Export. The dialogue will give you various options, including altering the format, naming the files and changing the size. Again, producing a copy.
Show File: a. On iPhoto 09 and earlier: Right- (or Control-) Click on a pic and in the resulting dialogue choose 'Show File'. A Finder window will pop open with the file already selected. 3.b.
b: On iPhoto 11 and later: Select one of the affected photos in the iPhoto Window and go File -> Reveal in Finder -> Original. A Finder window will pop open with the file already selected.