After wrestling with Photoshop Crashes with large (1 GB+) files, I finally gave up and called Adobe. This problem frequently occurred when saving these large files.
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.
Mac OS X Hints
http://hints.macworld.com/article.php?story=20030827120121624