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$SO(3)$ is homeomorphic to $RP^3$, not to $S^2$. The relationship between $SO(3)$ and $S^2$ is that $SO(3)$ is the group of (orientation-preserving) isometries of $S^2$ in its round metric. If $M$ is any Riemannian manifold, the group of isometries of $M$ is a Lie group (this is an old theorem of Kobayashi)Kobayashi (edit: I mean Myers-Steenrod; see comments).

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$SO(3)$ is homeomorphic to $RP^3$, not to $S^2$. The relationship between $SO(3)$ and $S^2$ is that $SO(3)$ is the group of (orientation-preserving) isometries of $S^2$ in its round metric. If $M$ is any Riemannian manifold, the group of isometries of $M$ is a Lie group (this is an old theorem of Kobayashi).