My recommendation to use the LW 7 driver was based on the ability to use PPDs. PS Level 1 drivers do not support PPDs, and you just need PPDs to produce good output. Although I guess that any output on a 512K is good...
But Level 2 printers should just understand Level 1. OS X is designed around PS Level 2. Try installing the ESPGS libraries on OS X.
Find an older version of the utility. LaserWriters shipped with a System 6 software bundle.