Well, you've certainly run into "The Photoshop Tax" on new cameras. :) To get Photoshop/ACR to open a RAW file directly, it must be a new enough version that groks the RAW of the camera model. And since RAW is not a file format or a standard, and changes with each camera model, and Adobe has no time-travel capability, this means a version of ACR that came out after your camera was released and whatever version of Photoshop was current at the time, as Adobe only makes the latest version of ACR compatible with the latest version of Photoshop. So, for the RX100, to use the RAW files directly, you need at least CS6 and ACR 7.2.

Using DNG is the end run around having to upgrade Photoshop. But you need a version of the DNG converter that can grok your camera's RAW output. In the case of the RX100, that means you have to have DNG converter 7.2 or later (ACR and DNG typically share version numbers). Personally, I'd go for the very latest version that runs on Snow Leopard, which is 8.3.

I'm not sure what plugin you were installing, as a plugin is not required to open a DNG file. I used 50D RAW .CR2 files by using the DNG Converter and opening the resulting DNG files directly in Photoshop CS (1). And any Adobe Camera RAW (ACR) updates you do to CS2 will be too old to understand the RX100 RAW files.