"The (DDS) format is specifically designed for use in real-time rendering applications, such as 3D games"
Greg Thomas wrote back to me with this:
"I [...] found a web page where I was able to download an NVIDIA plugin that allows opening of DDS files in Photoshop CS2 or CS3. I am not sure if it does for CS4.
http://developer.nvidia.com/object/photoshop_dds_plugins.html is a link to the plugin, NVIDIA Plug-ins for Adobe Photoshop.
Once installed, I was able to open the DDS normal map in Photoshop."
Thanks Greg for sharing this.