To the OP and everyone else on this thread, please take this as no more than my personal opinion, but I would highly advise getting used to and using Hangouts for SMS.
Why?
Well, for one, it's a feature many of us have been clamoring for for a while now. It may be a bit "clunky" (I haven't had the chance to actually use it yet with SMS), but it's bound to get more refined as bugs are worked out and updates are released. The iMessage feature of iOS devices is truly one of the few features of that platform that I really miss on Android...if this can be done well, Hangouts has the potential to even better than iMessage (primarily because it isn't limited to Android devices). I'm sure that folks like myself, that already use Hangouts quite a bit, are more excited about this feature and more apt to adopt Hangouts as their sole messaging app than those that don't already use Hangouts; but as someone that uses it quite a bit, I can at least say that it shouldn't take long to get used to is actually quite a decent app.
Second, now that Google has added this feature, there's a good chance that once a larger number of folks are using it in it's full capacity, a lot more folks will actually be sending "hangout" messages, so it will be a lot more practical to use the Hangouts app for both SMS and Hangouts messages, rather than having to switch back and forth between multiple messaging apps.
That's just my take. To me, it seems counter-productive to go out of my way to find other apps to achieve lessor functionality, but take that with a grain of salt...this is Android after all, so the freedom of choice is yours.
Same here, however can someone explain what exactly a "hangout" is? My understanding is that you can get group chats of your circles going in a MMS/SMS/video chat format but for someone who doesn't use google+ is there someway to search for hangouts relative to your interests and join those via the app on the phone or do you have to join those circles first? Or am I totally not getting how this works?
I think this is the biggest problem with Google's merging of "Talk" (their former chat feature) and the original "Hangouts" (the Google+ video messaging feature)...folks don't always quite understand exactly what Hangouts is, and for that reason have avoided an otherwise fantastic service. For one thing, it's no longer
tied to Google+, which for some reason some people have avoided like the plague, but rather is now pretty much it's own entity in the Google universe. Yes, Hangouts are part of Google+ still, but also part of Gmail and used for mobile messaging as well, completely separate from Google+ (as least as much as they can be...I mean, all Google services are essentially all tied together in one way or another).
For the most part, what you do with the Hangouts app on your phone is going to more closely resemble the old "Talk" app functionality. It's essentially a chat application that is an alternative to SMS/MMS (which is a pretty much ancient protocol by today's standards, IMO). From your phone, you can do one-on-one conversations with your friends, as well as group conversations, which work very well (much better than they did with the old Talk app). The capability for video chat is also present, also one-to-one or as a group. For those familiar, I like to compare it to BBM coupled with Face Time...but better. And now that SMS/MMS has been integrated into the phone app, you can use the same Hangouts app to manage conversations from those sources as well.
The feature you're talking about, the public/private video chats that was the cornerstone of "Google+ Hangouts", still exists, but is merely a small feature of platform now that Talk has been integrated into it (and frankly, that is still primarily a desktop feature, though it may work on your phone...I've honestly never tried it).