I found the transition to be anything but smooth. The option to merge never appeared before the roll-out was briefly suspended. When the switch was flipped, the new menu items automatically appeared in Hangouts settings. Unfortunately, I had no drop-down to select either GV SMS or Hangouts (hadn't been merged). By playing around, my wife found we had to open the deprecated GV app (now a brown warning appears at the top), send a text to a contact, then re-open Hangouts and -- finally! -- the options appear.
Some bugs we've noticed:
1. When SMS from Hangouts is opened on the Moto 360, only our side of the conversation is shown. Previously, it worked fine when SMS was received by the GV app and sent to the 360.
2. Moto X (Moto Assist) still doesn't read texts, even though Hangouts is officially the default SMS app now. Seems the built in app is hardwired to this touchless feature.
Has been a long time coming, but there's still some work to do!
TJH