Wonder why profile chosen for proof setup has the top priority? It is disable when a image file is read into PS.
Turning Soft proofing on and off does exactly the same as if choosing Edit > Assign to another profile and when done, choose Edit > Assign > to the previous profile - just make sure you don't save before but after reassigning the original profile. So the next time you open the image it is displayed in the color space of the original profile. Soft Proofing simply automates this process and also allows you to save in the middle of proofing without affecting the file.
Also soft proofing does the same what the profile selected for a working space in the color settings does to a untagged image, it just displays the image using the color space of the profile on the monitor but doesn't do anything to the file when saving it.
Information about soft proofing used is not saved with the file so when you open it again Photoshop can't automatically turn it on back for you and you have to do it manually.
When an image file is read into PS, do you agree that an working profile must be defined before further editing/viewing can be carried out?
If the image file is with a profile, the working profile in the color settings with default color management policy doesn't have any effect on the image and it will be displayed in the color space of the embedded profile. If the image is untagged (without a profile) then it will be displayed in the color space of the working profile. As I said this works the same as soft proofing, it it will not affect the color values in the file but only only in the video card for displaying it. The only difference from soft proofing is if you convert an untagged image to a profile - it will convert from the meaning of the colors as displayed in the color space of the working profile.
There is no rules when to changes the working profile in the color settings - it depends on what you want to do but in most cases people prefer to edit the image referring mostly to one color space and occasionally checking how the image looks in other color spaces using soft proofing. You may also make edits or alterations for a specific color space and separate the changes on different layers