I thought it might be interesting to graphically illustrate the image sharpening/RAW conversion situation in Photoshop CS3 and Lightroom, which share the same RAW engine.
This 100% crop represents one kind of worst-case scenario, mainly due to the high contrast fine lines at an oblique angle. The image was shot with a Canon 5D.
This first image was converted in Canon's Digital Photo Professional utility without any sharpening during or after the RAW conversion:
Here's the same image converted in Adobe Camera Raw (same as Lightroom), again without any sharpening:
It's clearly inferior, although not drastically so.
Now we look at sharpening in the context of the respective raw converters. (No manual unsharp masking, no Photokit sharpener, nothing but default sharpening levels in both products.)
Here's DPP:
Not too bad, although I could probably do better by with careful unsharp masking or using Photokit Sharpener.
And here's ACR, again with default sharpening:
Doh!
The conclusion I draw from this experiment (which was inspired by a series of frustrating real-life experiences) is that if you do a RAW conversion with an Adobe RAW converter and you're disappointed with how it looks, try again with the manufacturer's RAW converter. And make sure that sharpening features aren't exacerbating the situation.
I've created a Lightroom preset that does nothing but turn off Lightroom's sharpening parameter. I am using that preset by default for the time being.