1) Of course Photos has replaced iPhoto. It won't be long until iPhoto no longer runs on your computer and Photos will.
2) Yes, the new Photos application adds new great features, but if it's at the cost of losing existing features then it's not really progression unless the old features were useless or replaced with an improved system. In the case of an optional external editor, that feature wasn't useless and wasn't replaced. Unfortunately, losing the option to use an external editor will likely not be simply replaced by plugins/addons/extensions because someone who uses Photoshop won't have a Photoshop plugin for Photos and my guess (the way Apple has been going) is that seamless interaction between Photos and Photoshop (or other external applications) won't be allowed the way it is in iPhoto. I would LOVE to be wrong on that, but with Apple's bad decision making regarding this kind of thing, I'm afraid that will be the case. Time will tell.
3) I love how you keep defending Apple's choice not to add captions/annotations to their Photo apps as if that's a ridiculous idea for a photo management application with editing features. Preview is a "compositing app".. hahahaha. Preview is exactly as it's name implies - a previewing application that opens a wonderful array of file formats so you don't have to either have the original program or take the time to launch a resource intensive program just to quickly view or print a document. The fact that it has annotation ability is awesome and beyond it's basic functionality. Preview continues to have the genius of Apple slathered all over it.
4) The third party developer add-ons is indeed the best part of the new Photos application and I'll bet annotation will be in the first 5 developments and I'll also bet it will be the #1 downloaded plugin. Somewhere in the top 10 will be using an external editor (if it's even possible). Apple should have just included that in the first place as Adobe isn't going to make a Photos plugin version of Photoshop.
Regarding Apple's decision making, I won't even bother going into the myriad of nonsensical changes Apple has made to both their hardware and software over the last bunch of years because that's not what this thread is about. There are plenty of those threads out there. It's not a "misunderstanding", it's Apple not thinking through what their systems already do and adding to it to make it better rather then removing key features, moving existing features to where it's no longer intuitive to use, adding unnecessary complexity to both front-end and back-end systems, or making their hardware non-expandable or upgradeable. None of that is simple misunderstanding by the user - it's non-Apple'esque choices by the current decision makers in the company - and I'm not talking about the business-lead decision makers, I'm talking about the engineering leads who are actually developing the stuff and changing the way things work - the lead who chose to omit (or possibly overlooked implementing) an external editor from Photos, for example
I've ridden the Apple wave since 1993 as a user, technician and developer, loving it all the way until about 4 or 5 years ago when it started really taking a turn for the worse. I continue to be an Apple user because they are still the best out there, but the gap between the brilliance of what Apple has been and the progress of their competition keeps closing and that's not because of how much better the competition is getting... it has a lot to do with the decisions Apple makes. Maybe the people who don't know who Apple has been have no contrast to who they've been moving towards becoming.
I know not everyone agrees with me, and they can either post that disagreement, or leave it, but I'm done with this thread because there is nothing to add, and I know it probably doesn't seem like it from the last few posts, but I don't like to be opinionated or argumentative online as its just enflaming and pointless. I know my original posted tip from over 4 years ago has helped people and that was all I was intending to do.
-Neil