Adobe pointed out a preference that I had not taken note of previously. One of the pull-downs under Preferences is Memory & Image Cache. The Memory setting determines what percentage of available RAM Photoshop 7 can use when running in OS X. The default setting is 50%. Adobe says that moving this setting to 75% solves the problem 100% of the time. They warned never to go above 75% or system instability can result.
I made the change and the artist has been working on a file that typically choked it up in a matter of minutes and it looks good so far.

