In my opinion, you're usually going to be better off with an older DSLR than a more modern point and shoot. I'm not a Nikon guy, so I'm not sure how old the d-80 or d-40 is, but I bought my Canon 40D used at least 5-6 years ago, and I'd take it over any point and shoot digital camera on the market. Now, let me qualify that statement by saying the price of the lenses I use on said camera range from $400 to $2500, so the question really needs to include how much money your friend is willing to invest in a lens. With the cheaper lenses, I think an older DSLR is probably still going to win out, but it may be a really close call. These compact cameras have been cramming more and more megapixels onto their sensors, but I haven't seen one much beyond 10MP where I've seen any significant improvement in picture quality. Also, although picture quality is a bit part of it, functionality and versatility play significant roles as well, and in those areas, as long as you're OK with the larger size, a DSLR is going to win pretty much every time.
So, I apologize for not really answering your question, but the one piece of information that's missing is what type of lens will be used on the DSLR. Also, was he looking at any particular Lumix? I own the DMC-LX5, and although I'm really happy with it, I bought it because it's light and portable, not to replace either of my DSLRs, which it really doesn't hold a flame to.