Almost anything you can do in Photoshop CS3 you can also do in Photoshop Elements 7 (seriously there are very few exceptions and they share the same exact technology). Just sometimes things are in a different place (for example shadows/Highlights in Photoshop Cs3 are under Image and in Photoshop Elements are under Enhance > Adjust Lighting). So you can still benefit from all the tutorials out there on how to do something in Photoshop CS3 (or even CS4).
If you want to convert your pictures into drawings you'll want to start playing with the filters (in the Editor, click on 'Filters'), start with the ones under 'Artistic', 'Brush Stroke' and 'Sketch'. This can get you a good feel for what you can do "instantly", and don't be shy, try changing the settings on every filter adding one filter on top of another, etc.
You will also need a good grasp in the concept of layers and blending modes to take it to the next level.
You can learn about Photoshop Elements Layers with this Slideshow:
http://experts.na3.acrobat.com/pse7_layers/ (just be sure to click on the Notes Tab to read some special info on some of the slides)
or in the help files:
http://help.adobe.com/en_US/PhotoshopElements/7.0_Win/WSae2ea3b149d0c3591ae939f103860b3d59-7fb0.html
You can learn more about blending mode here:
http://help.adobe.com/en_US/PhotoshopElements/7.0_Win/WSB83E6D5F-6E0E-4ceb-BB76-4E377A7834DB.html
And the Photoshop CS4 help files has a graphical example (it is exactly the same stuff in Photoshop Elements 7):
http://help.adobe.com/en_US/Photoshop/11.0/WSfd1234e1c4b69f30ea53e41001031ab64-77e8a.html
The very impressive images you see out there that were created from a real photo and converted to look like a painting actually can take hours to do, so they are mostly not a one click deal as most people believe.
There are some good plug-ins out there, that will do all the work for you, but almost all of them cost money (and most work fine with Photoshop Elements).
Good Luck!