Oh hdiutil, what can't you do?

(orig article)

The punchline:

hdiutil convert image.dmg -format UDTO -o image.iso

Although this makes a file with the extension .cdr, the article claims that it is an iso file and can be renamed as such.

This allows me to use the OS X Disk Utility to create .iso images that can then be mounted from Parallels desktop or VMware.

UPDATE:
The above article seems to be a complete lie, but at least it pointed me at hdiutil... the above approach makes iso images that Mac OS X can mount, but do not work within Parallels.

However, the following command seems like it does the job:

hdiutil makehybrid -o image image.dmg