I had the same problem and have half of the solution you need. Still searching for the rest!
This works for Word Process documents only and if the document isn't too, too old to be opened at all. (Pages will NOT recognize Drawing documents or any other subsets of AppleWorks):
1. Open the Appleworks file, then save and close. This somehow updates the file or ??. It's a necessary step.
Not in my experience. As long as the document is Word Processing and AW6, it can be opened directly in Pages. In any case, if you have Lion/Mountain Lion you can't run AW anyway.
I'm still looking for a solution to easily converting Drawing files!
There are two. Draw Documents can be opened directly only in EazyDraw (the more expensive version from their website, not the cheaper one from the Mac App Store, and you will need v4.0 'Retro' not the most recent version) or Intaglio (though this appears not to be able to handle very complex drawings). However it is possible to open Draw documents in Pages, but you have to be able to run AW as it involves copying them into a WP document - please see this page:
Nothing will open Database or Paint documents. Again, if you can run AW and export Database data as an ASCII file you can then open that in other database programs, but of course you lose all the formatting - please see this page:
Numbers will open AW spreadsheets.
My OS 10.6.8 has AppleWorks 6 installed, but it barely works at all.
It works perfectly well on Snow Leopard for me, so something else on your system may be getting in the way.