Smart Object on import improvement

I double-click a Smart Object, a new tab opens with the Smart Object in it, I make the changes I want, then I click Save, and instead of saving the changes and taking me back to the first tab, the JPEG or PNG Error dialog appears (Can't save this document back to its original file format. Flatten layers and discard extra data as necessary then choose File > Save again.)

This issue has been posted in plenty of forums before, and while I completely understand that a JPG cannot sustain layers or other modifications, what is the point of having a Smart Object if it behaves like this? This is SURELY a bug and could be handled way better.

If I import files into my Photoshop document as a Smart Object, then it should be.. a SMART OBJECT—not some ‘Embedded JPG You Cannot Edit’ nonsense. I’ve seen replies saying this is “normal behaviour” while patronizing people who rightly asked the question. I had to write my own script just to import multiple files into the same PSD and have them be directly editable without having to package them again into another Smart Object.

Photoshop, FIX THIS. It’s super annoying. Nobody cares if the original file was a JPG a PNG or a WEBP—we’re going to re-export it anyway into whatever format we need. My suggestion? Whenever I drop an image into Photoshop, it should be converted into a REAL Smart Object—whether it’s inside a PSD or PSB container, nobody cares.

What we need is simple:

1. I drag an image into a Photoshop file.

2. I double-click the 'smart object layer' of the image I just import it to edit it.

3. I mask, add layers, type, or do whatever I need.

4. I press Save, and the Smart Object updates seamlessly without any stupid dialogs halting my work flow. 

That’s it. SIMPLE. Nobody cares that the file used to be a JPG or a PNG, and if they really do, then embed the container info so Photoshop remembers the original format when exporting. Not that it’s necessary at all.