powderizedbookworm

Not the person you're asking, but in my view, to qualify as a "text editor," there would need to be a space that didn't impose page breaks on the words. Basically, a space I could write, edit, or paste, text and then the software would put it into text boxes, pages, etc.

Not as such, no. Word processors aren't text editors, but they can behave like one, which Publisher cannot do currently.
For instance, Word has a web layout which lets text flow freely around the screen.
More importantly, if you paste 50,000 words of text into Word, Word will make as many pages as is necessary to accommodate that text. If you reduce the size of the margins, Word will understand that you wish to alter the area of text on every page. Every page will reflect that change, and as many pages as are necessary will be created to accommodate it.
Currently, Publisher has no way to wrangle huge amounts of text without worrying about formatting, and has no way to globally change the default formatting. This is fine for brochures, but is not fine for books.

Since my only experience with something like DTP is LaTeX, I believe you about this dichotomy. But to me, it seems like a false one. Why not make software that switches easily between "place everything for me" and "let me fiddle with everything individually."
Frankly, LaTeX itself is ungodly levels of kludgy, but the fundamental idea of telling the program what you intend text to do, and have that then converted into results, is quite sound, especially for things where formatting is its own beast (like the PhD thesis I just wrote), and I don't understand why more consumer programs don't embrace that model.
Take Publisher, which is what this forum is about after all. Presumably, given the name, they want people to make books with it...so why isn't there a "Chapter Heading" text type. For my own part, I made one. It has a counter, always starts on a new page, etc. But why did I have to make one at all? If I am writing a novel, I want total control over character and paragraph styles, but chances are the two will be always be linked together, and chances are a novel will have "chapters." 
It seems to me that the act and art of "Publishing" refers to a massive sliding scale of text/content:formatting/design ratio  printing a novel, which is 95% writing content and 5% formatting. It could refer to making a textbook, which is more like 70% content and 25% format. It could refer to a brochure, which is probably 50/50, or it could mean an advertising flyer, which is probably 25% content/text and 75% design. However, they all have the same basic stuff - characters, ligatures, spacing within text boxes, spacing of text boxes, etc. that you want to control finely, so there isn't much 
The ideal version of something like Publisher, to me, would have a handful of "modes" which highlight and alter the settings you care about, and a different emphasis on automated processes. 
If you are making a slide-show (as I do plan on doing in Publisher once its more stable and integrates well with Designer),  you want a master template slide with editable title text and text boxes, and the ability to intuitively add color swatches and a small number of text formats with the emphasis on Character settings rather than Paragraph settings. Basically, nothing you can't do in Designer right now, but add the nice text and table tools that Publisher already has, along with a more robust templating system, and it would be perfect.
Or, you can turn it on in book mode, and the default behavior becomes automatic page formation, master text box size, and text formatting is defaulted to combined Character and Paragraph settings, so its easy to designate text as "Chapter Title" or "Section Header" with menu items, and make the default setting be intertwined character and paragraph settings, with automatic counting and indexing of chapters/figures/etc. The default studio sidebar would be a text based (rather than page based) outline view. Basically, something a publisher could give to an author that the author could actually use to write with, and then give back and work with a designer for look and feel, rather than the MS word based hell I imagine it being.
Macro packs and templates will go a long way, but it seems to me that what is needed is out-of-the-box default behaviors.

I've enjoyed reading the discussions, and I'm learning stuff, but there is one basic thing that is eluding me...
How is one supposed to process text in this program?
Basically, my basic page of a document is going to be a standard sized box of text (frame text) which is the continuation of the page before it, and which will continue into the page after it. This default page might get broken up by an image, or a table, or another text box. I might even opt to have a page dedicated solely to standalone text which does not interact with the pages before or after, but by and large my text is going to flow from page-to-page.
I'm not sure how much of this is my idiocy, and how much is buggy beta software, but making a master page with a text box seems like the way that I would make this "default page," but doing so only allows me to put text into this box in the master page (which puts it on all pages). If I put a few pages of lipsum in the master page, and try to Autoflow the master page, it throws the text off the pages entirely, and does weirder things if I try to autoflow in the pages.
It seems patently absurd to me that I should make text boxes by hand in each and every page I plan on using...so what am I doing wrong?
I've been playing with the program for the last little bit, and have figured out how to use the table of contents, and I like the independent/parallel counters (hierarchical for chapters/sections/subsections with different counters for tables and figures). I have some quibbles (notably, it seems impossible to add a figure caption which will show up in the TOC, as well as explanation body text without a line break), and the current lack of cross-referencing is a deal breaker for scientific work. I also think there needs to be some standardized commands - insert a placeholder image along with a text box a set distance below with pre-formatted text (including TOC entry/caption, and counter) for making a figure, for instance, but those kinds of things can be solved with macros and templates.
For now though, I have no idea how I put large amounts of text onto consecutive, templated, pages...which seems like the most important thing I'd use this tool for.