I saw that, but if you take a look at the wording they use for denial ("Maybe Later"), that's what they did every single time before shoving it down on all customers' throats. Plus, that question pops up every single time Hangouts gets updated and there's no way to make it stop, because surprise, you can't uninstall Hangouts. The message on the wall is very clear - in future versions of Android Hangouts will be the SMS app.
> It just makes it easier to manage SMS and Hangouts conversations side by side through the same app.
No it doesn't, it's actually quite confusing. At some point I sent a message to my wife, without paying attention if it's SMS or not and so I sent it by Hangouts because that's the default, but she's not using her Google account at all and never received the message. And you have to pay attention like every single time.
It's much, much easier to separate services, when they are in fact different. For SMS, I open the SMS app and I send and receive SMS messages. For Hangouts, I open the Hangouts app and I send and receive Hangouts messages. When I'm not sure what protocol to use for somebody, I go to that contact's details and check out the available options. If I have to read new messages, I click on the notification. If I want to reply to a new message, I'm already in the right app. What could be simpler than that?
Trying to combine Hangouts or any other SMS alternative with SMS in the same app is first of all a huge usability fail - unless that service would fallback to SMS in case delivery didn't happen, in which case there's always the question of unexpected billing, because your phone number is going to have to send that SMS and SMS can get quite expensive - so no, it's an epic failure.