I'm getting the feeling that everyone here who's answered this question doesn't know what it's like to be a web application developer who allows people to install the application on their own servers. Shared hosting, especially, doesn't allow you to use SQL like the "LOAD DATA" query mentioned previously. Most shared hosts also don't allow you to use shell_exec.
Now, to answer the OP, your best bet is to just build out a PHP file that contains your queries in a variable and can just run them. If you're determined to parse .sql files, you should look into phpMyAdmin and get some ideas for getting data out of .sql files that way. Look around at other web applications that have installers and you'll see that, rather than use .sql files for their queries, they just package them up in PHP files and just run each string through mysql_query or whatever it is that they need to do.