I currently process my RAW .CR2 files in LR and export the finished result as DNG. Other than all the 'bells n whistles' of using Photoshop CS3 are there any benefits in using ACR/CS3 over LR? Thanks.

The DNG is hardly a "finished result", it is a raw image file; the adjustments you made are recorded on their own, i.e. the image data is unchanged. In order to create some "finished result" you need to convert the raw image in TIFF, JPEG, PNG, whatever. If you are satisfied with what you can do in LR, then be happy and create TIFF/JPEG there. If you need some more complex image editing, you can use for example PS. In PS you can open the TIFF or JPEG you created in LR, or open the DNG and make the very same raw conversion as you declared in LR (or change your adjustments).

(If you do intend to make further processing in PS, then do not pass JPEG from LR.)

ACR is the core of the Adobe raw processing, the same in LR as in PS, with somewhat different UI.

As you say, it depends if you need the editing options of PS.

It depends what you want to do with the image, but you can print from LR, or save from in .Jpg, or in .dng if you might want to more to the pic later.

My theory is to leave the files I do not need immediately in the camera's native format but keyword them so that I can fine them if I need them. One reason for this is that the camera raw (.3fr or .fff) files are about one third to one fith of the size of .psd files.