Hello, world.  - 
Confirmed: android.permission.READ_SMS and android.permission.SEND_SMS both listed in the Hangouts permissions page. Guess we all know what's coming... A total #iMessageKiller#HangoutsFTW  
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The app already verifies your phone number if you are on a telephone-enabled device. Didn't everyone get that dialog for the most part?
Just the moment of truth. If anything, it might try to embed your text messages in line as well.
I know, just pointing that out. It would be a Christmas miracle if they did in-line SMS. It'd be enough to replace Google Voice and the stock Messaging app in one fell swoop.
Well, guys, when Android 4.3 comes out, we'll know for sure whether Hangouts will use android.telephony.SmsManager or not...
Like +Ronald Kinard I also noticed that the confirmation SMS is intercepted by Hangouts upstream of the native SMS app, so it's pretty clear they got part of that baked in before launch. 
It could just require those permissions to complete the number verification process.. 

Google Voice also uses a similar process. It could be hangouts is also replacing Google Voice, not the native SMS app.. Ideally it'd replace both.
this is good news indeed, sms and google voice in one app would be nice
Yes, and as per +Tom Rodman the app (for Android at least) actually intercepts the confirmation SMS and displays the confirmation SMS message itself as an in-app conversation.

Which must mean, of course, that the issue people are complaining about is not an issue of ability but an issue of defaults. I'm sure if one goes into Android settings > Default applications, sets Hangouts as the default messaging app, roots the phone, and removes the default messaging app, you'll probably get the most out of Hangouts... to say the least.
Can't you just disable the stock messaging app in 4.0 forward? That should have the same effect. Is it possible to see if Hangouts actually accepts the VIEW action with the sms schema in the intent manifest?
Just tested it with a friend, it does not work as +Kenny Strawn mentioned. The message is not received at all by the app. Bummer :(
+Ronald Kinard It's actually the confirmation SMS that a few others tested it on (and in the Android app; obviously in iOS it doesn't work), but if that's the only message that happens to be intercepted (and nothing subsequently), then it is probably a work in progress.
I linked one of these tech pages to this post last night cant remember if it was that post i'm glad you got credit for it +Kenny Strawn 
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