Please note: I revised this on 10/20/09.
Hi Ken, Lots of important lessons here. I brought the image into PS to reduce the contrast (which I did) and noted that as presented originally above, there were lots of overexposed pixels, not only in the whites of the neck but in the reds and the yellows. I reduced the red and yellow SAT and eliminated the over-EXP in those areas, but the whites are un-salvageable at this point.
I see this in many images here so I came up with this tutorial:
#1: The best time to "save the highlights" is at the time of capture. After making a single image of a subject in a given light, you need to check both the histogram (to make sure that you are exposing well to the right), and then check for flashing highlights (or visa versa). If you have any flashing highlights, you need to subtract light from your exposure.
#2: If you do wind up with some over-exposed pixels, they must be dealt with during conversion! If you convert the image too light, i.e., with over-exposed pixels, then you can never recover the highlights... Most every program used to convert our images has a way to a-check for over-exposed pixels--you need to have the alerts set in whatever program you are using. In ACR, set up the red warning for overexposed highlights and the blue warning for underexposed shadows. I believe that it is pretty much the same in Lightroom and Aperture. It is possible to both check for and recover flashing highlights in Aperture.
In Breezebrowser, I simply hit Exposure Compensation in the Conversion Window and then check the histogram. If the image shows clipped highlights, I reduce the EXP and then use Combined as the conversion. This helps recover apparently but not actually lost highlights.
In ACR, your first move with all images should be with the Recovery Slider (even if you do not see any red warnings). Hold down the ALT key; if there are no warning pixels showing, leave the Recovery Slider as is and move on to the Exposure Slider. (See the instructions below for the Exposure Slider.)
It you see warning pixels while holding down the ALT key, move the Recovery Slider to the right until the warnings disappear. If and when they all disappear, leave the Slider where it is. No need then to go on to the Exposure Slider. Just move on to the Black Slider.
Whenever you move the Exposure Slider, hold down the ALT key just as you did with the Recovery Slider. If there are no hot pixels showing, move the slider to the right until you see a few pixels and then back off till they disappear. If you are still seeing hot pixels after moving the Recovery Slider to 100, move the EXP Slider to the left...
With badly overexposed images you might not be able to save the highlights or if you do, the overall image may become well underexposed. Next time get it right in the field!
#3: If you have whites that are technically not over-exposed but lack density and detail, you can improve those areas by either Multiplying the selection or applying a Linear Burn. See that thread in Education Resources.