A WA add on wet mate lens is not going to be $1000- they will start around $330ish. I have one for the Oly 5050 and adore it (as much as I adore anything WA). It is a great investment if you are wanting to shoot big things - distance is your enemy underwater. If you really want to shoot stuff that is big and far away, a strobe is in your future unless you are happy to shoot natural light and silhouettes.
http://www.reefphoto.com/index.php?...rers_id=4&sort=1&main_page=index&filter_id=15
I would talk to Ryan at
ryan@reefphoto.com - he does this every day and really is good about suggesting cameras that suit YOUR needs.
If you are looking for small, you'll need to stick with the manufacturer's housing and not the Ikelite etc as they are considerably bigger and bulkier.
I really like the Canon 620, but in the Canon housing you cannot add wet mate lenses. The Oly 350 seems to be popular and those using it are enjoying it. I'm not sure how small it is compared to what you have.
RAW will very much help you acheive better results in a wider variety of conditions, but you will still have to shoot within the capabilities of your camera system.
I would compare minimum focus distance at
www.dpreview.com for the models you are interested in. Remember closer might not always be better when we start talking about getting so close as to invade a creature's space. Sometimes a better option is to be a tiny bit away and use your zoom to fill the frame.
So many options! Have fun shopping!