Planning a DSLR for my wife.
Can PSE deal successfully with RAW & be used as the sole PP software?
In short, yes.
PSE is a sort of admix of strippd down versions of both Photoshop and Lightroom. It handle RAW files just fine and combines the more basic features of both LR and PS while leaving out the more advanced functionality of both. It has some of the workflow management tools of Lightroom and some of the editing tools from Photoshop and as such it could be used as your sole tool for editing and workflow management. Heck, I do most of my most basic adjustment in Camera RAW (which would come with Elements) and I think I a strong case could be made that ACR is about the only editing tool you need... I mean, it could be done!
The big deal-breakers for me in using PSE are these: No support for 16-bit file processing (8-bit only). BOOM.
That... Is reason enough right there for me; I'm not stripping down my 14-bit RAW files to 8-bit for post processing, no way, no how. There is no support for "Actions", like PS has, which is a big bummer and, lastly... I'm addicted to Adobe Bridge (which only comes with PS I believe) as my management tool. It's just sooo powerful, easy and well integrated with PS that I couldn't live without it now. The idea of not having Review Mode in Bridge to cull my shots is just unthinkable. Granted, these are personal reasons but they may be things you want to think about as well.