Sid,
Here is my response to your post on the 2.0Beta Forum
Hi Sid,
The behavior has not changed between 1.4 and 2.0. With the photo selected I hit CTRL-E and the program writes a copy into the catalogue and opens it in PS. When I am done with my PS edits I close the photo and choose to save the changes made. The changes then show up on the copy in LR. I do choose "Edit a copy with LR changes" in the "Edit In Photoshop" dialogue that opens.
HTH
Rich