I then used my favorite free tool called ImDisk to mount the converted hard disk image. Default settings worked fine and ImDisk was able to mount 'converted.hdd' file in read-only mode.
Edit: The new version of Parallels Image Tool uses a little bit different GUI. Converting to the plain format is now done by going to "Manage disk properties" option. The quote "The perfect is the enemy of the good." from Voltaire's Dictionnaire Philosophique (1764) is quite relevant in this case because the latest version may not always successfully convert "old" HDS files, so do not yet through away/uninstall your old version of Parallels.