Another Iphoto '11 and PSE9 Questions

I'm running the latest version of iphoto '11.   Just installed PSE9 and all of the updates.
I've made PSE9 the external editor in iphoto.
In the PSE9 prefs, I set:
- the color picker to apple's
- set on first save to save over current file
When I want to edit a JPEG file in iphoto, I select the file, and click on the edit button in the bottom corner. Iphoto duplicates it (that is fine) and the picture comes up in PSE9.  I edit it (draw a big snowflake on it), and then select File -> Save.  (Not save as).  A save dialog pops up. 
QUESTION 1) I thought the save dialog should NOT pop up?  Help?
QUESTION 2) In the same dialog, the format is set to photoshop.   If I click save, the changes don't show up in iphoto.  Make sense-- it is in photoshop format. Should I have to manually select JPEG everytime?  It doesn't auto select it?
If I change it to jpeg and click save, and then click ok on the jpeg option window, the file saves and I see the changes in iphoto.
In iphoto, if I now select the modified photo and select edit, it doesn't make a duplicate first.  I guess it knows not to?
I edit the photo in PSE9 again (add another snow flake) and select file -> save.The save dialog pops up again and photoshop format is selected.  If I select JPEG, the name now changes from IMG13_3.jpg to IMG13_3 copy.jpg.
Question 3)  If I save it, it is a new file, and the changes don't show up in iphoto.  Is this expected?  I have to manually change the file name?
This doesn't seem all that efficient and could be stream lined...
Thanks

This may be preaching to the choir but here goes:
Using Photoshop (or Photoshop Elements) as Your Editor of Choice in iPhoto.
1 - select Photoshop as your editor of choice in iPhoto's Advanced Preference Section's under the "Edit photo:" menu.
Click to view full size
2 - double click on the thumbnail in iPhoto to open it in Photoshop. When you're finished editing click on the Save button. If you immediately get the JPEG Options window make your selection (Baseline standard seems to be the most compatible jpeg format) and click on the OK button. Your done.
3 - however, if you get the navigation window
Click to view full size
that indicates that PS wants to save it as a PS formatted file. You'll need to either select JPEG from the menu and save (top image) or click on the desktop in the Navigation window (bottom image) and save it to the desktop for importing as a new photo.
This method will let iPhoto know that the photo has been editied and will update the thumbnail file to reflect the edit..
NOTE: With Photoshop Elements 9 the Saving File preferences should be configured as shown:
Click to view full sizes
I also suggest the Maximize PSD File Compatabilty be set to Always.
In PSE’s General preference pane set the Color Picker to Apple as shown:
Click to view full size
NOTE: If you want to use both iPhoto's editing mode and PS/PSE without having to go back and forth to the Preference pane, once you've selected PS as your editor of choice, reset the Preferences back to "Open in iPhoto". That will let you either edit in iPhoto using the Edit button or Control-clicking on the thumbnail and selecting "Edit in iPhoto" or in PS/PSE by Control-clicking on the thumbnail and selecting "Edit in External Editor" in the Contextual menu.
Click to view full size
This way you get the best of both worlds.
Happy Holidays

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    Click to view full size
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