The particle board HAS to go. Once you get it torn up, go ahead and address any squeaks in the 1/2" plywood before putting new plywood over it. You will be tempted to think that by screwing through both the new plywood and the existing plywood that it will firm everything up and eliminate any squeaks you may have. Don't count on it.
Get good fir plywood to replace the particle board. You will most likely have to go to a lumber yard to get it. I've found that the stuff Home Depot, Menards, Lowes sells sucks for this application. The stuff I get is 5 ply and much more rigid than the three ply stuff. It costs a bit more, but it worth it to not have to fight a piece of cheap plywood that doesn't want to lay flat.
Once you tear up the particle board, you may find the plywood to be sagging in places or squishy. Pay particular attention to the areas where two boards meet. You may need to put some braces in between the joists in some areas.
When you put the new plywood down, be sure not to have the joints line up with the existing plywood, and to run it long ways across the joists. This is the strongest direction of the plywood. It should be that way now I'm guessing.
I like to use PL400 deck and subfloor adhesive between the layers. For what it costs compared to the rest of you materials and the time you'll have invested, don't skimp. Put down twice as much as you think you'll need. Cant have too much. I also use this adhesive to glue down any hardwood plank that will be facenailed as well as stairnoses, reducers, etc.
For raising the dining room. Is it the area that you have to remove the particle board? If it is, just get 3/4 vs 1/2. If not, just build it up 1/4. If it is a solid and sturdy floor already, OSB is fine. You dont really need the additional strength.
Keep us posted,
Paul