It sounds like you (and possibly the author of the article) turned off the iPhoto option to automatically import photo stream images to your library. See:
http://support.apple.com/kb/PH2712
Other than videos not being included (yes, that's annoying), it does exactly what I need. Am I missing some other aspect?
Suppose you have two computers, each with its own iPhoto library. Picasa does not unify all the photos into one repository and allow you to use them (for edits, or for composition into specialized collections of photos for sharing).
Also, it does not solve the problem of the iPhoto library filling up most of the hard drive and the user still wanting to seamlessly use the photos as described above.
Nope. All photos (and screenshots) are added to iPhoto automatically as long as iPhoto is actually running, even if the iPhone is on wifi in a different country, meaning its not just a local sync. Only videos require physical cable.
Other than videos not being included (yes, that's annoying), it does exactly what I need. Am I missing some other aspect?