All depends on your needs. If you are wanting to create a color swatch palette from all the colors in an image (as in original post) or just wanting to create a custom color swatch palette. In some cases I only want certain colors from image(s). I have custom swatches built on point sample, 3by3 average, and 5by5 average from several spots on several images. There are other cases where I want all the colors from an image.

I did notice (after posting earlier) that in PS 7 you can't use the "Click 2nd swatch, hold shift and click on last swatch (to select all but 1) then hit delete". You are stuck with the one by one deleting. It does work in PS CS though.

Saving as an .act does have another advantage. It won't automatically be added to the list at bottom of pulldown which can get unbearably long.

No matter how many times I use Photoshop, there are always things to be learned and many ways to accomplish what you want to do. I would love to see more tips and tricks.