With all due respect, Photoshop is fine for what he is doing. The printer is not going to be a vector device and it has a limited resolution. It really doesn't matter what file type is used (other than the requirement to be able to read it) as the output will be raster at some maximum resolution. As long as the file is saved with as much (or higher) resolution as the output device the result will be a print at the maximum resolution of the print device. The file size might be high, but the resuult will be the same.
IF you are going to use photoshop to do this...make sure you set the resolution when you open the ai file. When photoshop opens the file it interprets the vector information and creates a raster image. It can do this at whatever resolution you choose, but once done, if you adjust resolution after that you can only reduce the size or resolution without loss. If you increase the size or resolution you are going to get a fuzzy image.
Working the whole thing in AI is a much better option, but if you don't have AI you can use photoshop and get where you want to go.
I did the side art for my cab completely in photoshop because it is photo realistic art and vector won't work for that anyway. Had them printed at MameMarquees and they are stunning. Of course, the files are over 1G PER SIDE

Mike, did you find out what options they have for cutting out your decals?