I'm following the explanation on
http://code.google.com/p/pyramidlinux/wiki/InstallingPyramidPhysDiskWriteApparently there is a little mistake, they might have forget to precise that it is a zipped file.
I tried to extract pyramid-1.0b6.img.gz, and I got pyramid-1.0b6.img.
I drag and drop the image file onto the physdiskwrite icon, and it works.
Thank you, have a nice evening