Speculation on lack of SMS support in Hangouts
So I was pondering this and came up with the following. When Apple introduced iMessage, it put it directly into the messages app so that there was no distinction between SMS and iMessage except for colour. It was automatic and adoption was immediate and complete since it was the only SMS app available.
I'm thinking that SMS integration will come to Hangouts when Google removes the current Messaging app from Android to create the same instant integration like Apple. Since Messaging is a core (non-store) app perhaps they need an Android OS update to make that happen.
Just some speculation from someone who would love to use one messaging app (and would love to see chatheads in it)