some questions about RAW in general, and dynamic range as related to RAW

[ReF]

some of you may remember a thread about how shooting in RAW can improve dynamic range, well my question this time is about how you bring the extra stop of dynamic range into your picture during RAW processing. does it have anything to do with the contrast setting or the digital exposure compensation? sorry, i'm new to RAW processing and I've only used the canon RAW processor that came with the d-Rebel. i took a shot of a high contrast scene in RAW and purposely overexposed the highlights a bit, then i played with the Digital exposure compensation and contrast controls until the histogram look more balanced. am i going about this the right way? well, even if i'm not really sure what i'm doing, at least the processed RAW image came out a lot better than the original JPG at the same settings.

since i am new to RAW processing, i have a few more questions.

1. sharpness controls seem pretty limited (5 steps), would sharpening be better done with USM in photoshop, or am I comparing apples with oranges here?

2. the amount of adjustment seems pretty limited in the Canon RAW converter program (5 steps for each setting), do other programs such as Phase One Capture and photoshop's RAW converter offer more control?

3. how do you use the Kelvin white balance setting? is it's use base on trial and error (probably not) or is there a certain method to using it?

4. i'm really confused about color space settings, especiall the Adobe setting. can anyone explain?

thanks!