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If all you want is the merged image, there's an easy way to work around this. Label the PS document as a "builder" (_BLDR in the name), duplicate it, flatten the layers on the dup & save, label it as a "render" (_RNDR in the name) and import that flat file.
Thanks. I do realize I could do that, but I have about 60 Backgrounds. So it'd be nice to be able to import the whole photoshop file and still be able to work on it without having to flatten it every time. That's kind of what I've been doing so far.
Alright, I came up with a better workaround. I created a new psd file and put the original layered psd on a layer as a smart object and then imported that layer into After Effects. This seems to be working nicely, and I can still edit the original without having to resave a flattened file all the time.
It's still be nice to get this working properly though. It seems to only display the original layer of the photoshop file.
Did you use the "Maximize compatibility" option when saving the PSDs? Other things to look into: Does the PSD have a "Background" layer (helps to generate fa flattened preview)? Do you perhaps use extensively nested layer groups? Adjustment layers in the PSD (those are simply ignored)? Custom channels/ selections? Trim Paths? Conditional layer blending? Indeed your suggested workflow would work as AE would reference the updated PSD, but one of the above might screw you simply because AE doesn't support some PS features.