Do you have an idea for how it could know what you were trying to hide and what you wanted to keep visible?
Hide edges is there to allow you to modify your art without having it obscured by interface elements that indicate that it's selected. How else could that work without hiding all of those elements?
I guess it relates to how AI draws elements in the preview and live text not producing true edges. I've never had a problem with organising my layers in a way so I can toggle their visibility to circumvent these limitations, though, so to me it's a minor thing at best. I can imagine, however, how annoying it might get with lots of expanded content needing to be tweaked and complimented with additional elements...
The easy reply first:
yes, as I tell all of my clients and colleagues... using layers in Illi are a must and your best friend. I actually used layers in FH as well, however, a lot of FH users never found the need to. Go figure.
I hate to be a bore, but hey, why can FH (since v.1 I believe) hide the points when multiple objects are grouped? And even if they are grouped with text, why can I still alt-select in the group, text... seeing that it's selected, with a curser. Technically, you would almost never even need Hide Edges, if grouped objects only showed it's bounding box... which you can hide already anyway.
Sorry... but this is STILL one of the main problems I hear from colleagues, as well as a pain personally, moving over to Illustrator. It can't be that hard. I expect a simple elseIf statement, like: if text object show curser; else hide all? If grouped, hide points; else show all? Something like that? I expect something as primitive and simple as my knowledge of programming.
What happened to "Just do it"? Or was that only the Photoshop group's mantra?