Photoshop direct to SB without going through Illustrator

[marvkaye 1]

I was fighting the battle of trying to send psd files to Illustrator to convert shapes to cuttable outlines, but it was a complete pain and only worked some of the time.  I discovered that if I copied my shape in Photoshop CS3to a new layer and did a few things there I could import the ai file directly to SignBlazer and use its vecorize function to make it work.  This was to convert low-rez jpg images of various stencils into cuttable images so I could make my own stencils in various sizes.  These are the steps I took...

First, convert the image size to 300ppi to boost the resolution.  Adjust the brightness and contrast to differentiate the desired image from the background.  Use a brush tool to eliminate anything in the image that wasn't needed (ie, logos, printing, etc, inside the desired shape).  Use the gaussian blur tool to smooth the edges... I found 3-4 pixels in width would typically do the job.  It rounded pointy edges a bit, and closed up small holes, but that was ok, as the smooth outline of the overall shape was what I was after.  Once the blur was applied I used the magic wand tool to select the area that defined my shape and then created a "new layer via copy" of the image.  I then erased the original layer and started working in the new layer.  First I reselect the shape and do a fill in white, then invert the selection and fill in black or 50% grey, then invert the selection again so I'm back to my desired shape.  At this point I switch to the Path pallette and select the "make workpath" icon.  This seemed to be the single most important step to making everything work when doing the import.  Save the image as a psd file and include "workpath" in the filename so I know I've got the right image.  Import it into SignBlazer and use the "vectorize" tool to define the outline and the image appears to be ready to cut.  (Still don't have my cutter, so am practicing with SB demo in advance of the delivery, trying to be ready.) 

Now for the big question.... if there's an easier way to accomplish this with Illustrator CS3 could one of you please share that with me?  I'd also like to learn how to use Illustrator on my "workpathed" images to restore the fine details that I lose in the blurring process.  I found that importing ai files that were saved in Illustrator 8 format seemed to work better than CS3 files, but I still don't have the process down... any suggestions would be greatlyu appreciated.  TIA  <marv>