Hi again woodenink,
I think the contrast issue will help give some control over your image engraving, but as some of the other users have already said , it is highly recommended to add text seperately, as a true, scalable, vector text object.
One of the reasons for this being that when you add text into a photoshop bitmap image , you are adding more steps of 'translation' between design and output and thus loss of quality. Photoshop converts the vector typeface into a bitmap format, and in doing so it softens / approximates the edges to some extent - known as "anti-aliasing" ( zoom in closely to photoshop text and you will see what i mean. The laser then attempts to replicate these soft edges resulting in poor output. This is particularly evident with small text less than say 5mm height.
if you add text in your laser software however, it will be a vector. IE constructed from a series lines and curves rather than pixels. this is scalable and does not lose quality in editing. Hence there is only one step of translation between design and output. (in Lasercut software, you are able to set the laser to either 'cut' the text by following its outline, or engrave-fill it. im not sure if photgrav gives these options )
not too scientific, but i hope this of some assistance.
KPB