I don't understand iPhoto 9 !

Question

I thought I'd finally understood iPhoto 9 (https://discussions.apple.com/thread/5175777?start=0&tstart=0). However, after what happened this morning, I'm utterly baffled!
1. I right-clicked an image (one originally imported into an older version of iPhoto) and chose Edit in External Editor.
While Photoshop Elements loaded I watched the iPhoto page to make sure it created a duplicate copy of the image - BUT IT DIDN'T!
2. After editing I decided to save it back to iPhoto. Elements gave me the Save option and offered to save it back to iPhoto, as a Photoshop image with all its layers. So I chose that option, and Elements saved without a murmur.
"That's interesting", I thought "You can save to iPhoto as a .psd file? Wow, I never knew that. Wonder what it will look like?" But it wasn't in iPhoto!! Not even as a .jpg, though the original unedited image was still there.
3. Back in Elements, the Save option was now greyed out, so I decided to Save As.. a .jpg, using the iPhoto path I was offered. I was then prompted "Pnnnnnnn.jpg already exists - do you want to replace it?" At this point I decided something was going wrong so I saved as a Photoshop file - all 43MB of it - into my Pictures folder, bypassing iPhoto altogether.
So my questions are
why didn't iPhoto create a duplicate copy when I chose to edit externally?
where is the file that Photoshop Elements apparently saved (as a .psd)?
why haven't the changes shown up in iPhoto?

Answer 1

Using Photoshop or Photoshop Elements as Your Editor of Choice in iPhoto.
1 - select Photoshop or Photoshop Elememts as your editor of choice in iPhoto's General Preference Section's under the "Edit photo:" menu.
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
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  the Saving File preferences should be configured as shown:
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:
Note 1: screenshots are from PSE 10
Note:  to switch between iPhoto and PS or PSE as the editor of choice Control (right)-click on the thumbnail and select either Edit in iPhoto or Edit in External Editor from the contextual menu. If you use iPhoto to edit more than PSE re-select iPhoto in the iPhoto General preference pane. Then iPhoto will be the default editor and you can use the contextual menu to select PSE for your editor when desired.
OT