What is the coolest way (using passive cooling only) to step 12V DC down to 5V DC
Instead of using a linear regulator, which has relatively low efficiency (~50%), use a switching DC-DC converter (efficiency around 80-90%). A decent one to start with is National's "simple switcher." It looks like the LMZ12001 would do the job-- up to 1 A at 5 V, and it accepts input voltages from 0.8-20 V.

http://www.national.com/pf/LM/LMZ12001.html