I haven't used it much yet, but Picturenaut seems to be a useful and free HDR editing app. There are also a bunch of free filters/plugins available, one of which is the Diffuse SH filter which can do a diffuse convolution of a full sized HDR image nearly instantly.
Software: nDo It's the best normal map maker I've use on Photoshop. It's a script that makes normal map from diffuse and you can control a lot of stuffs. Highly recommend! Price: FREE!!! Web: http://www.cgted.com/