Doyle, unfortunately I can't speak for Illustrator/InDesign since they're too far removed from what I'm familiar with.
Under Leopard there are now 2 color-managed print paths via the Quartz 2D API. In terms of interface, they manifest themselves in the Color Matching heading in the driver, with one option being ColorSync, the other being "Vendor Controls" (or sometime under another name, such as "Epson Color Controls", etc.).
When printing from PS CS4 under Leopard, when you choose Photoshop Manages Colors (or in LR if you choose a printer profile in the Print Module), then the first print path is used (i.e., ColorSync in the Color Matching section). This is absolutely the correct thing to do. When you choose Printer Manages Colors, then the second print path is used (i.e., "Vendor Controls" or whatever it's called).
Whether or not these options are enabled/disabled or not is largely irrelevant. Only two print paths are supported under Leopard, and this requires all parties involved (application, OS, driver) to be working in concert for both print paths to work correctly.
For instance, things work fine with the Epson RGB color drivers for their current printers under Leopard (even though the controls in the "Color Matching" pane are disabled and set to "ColorSync" when using Photoshop Manages Colors).