Haven't read the entire thread, so I'm not quite sure what the exact problem is with the Photos App and Libraries, but I did just want to say that in my case, the Photos App is displaying all files and folders in my Pictures Library. In fact, this is how I got the Photos App to show my pictures that are stored in Skydrive (I simply added my Skydrive Pictures folder to the Pictures Library).
Edit: The Photos App even knows that the Skydrive Pictures folder is from Skydrive, as when I select a subfolder from the Skydrive Pictures folder, the heading up top changes from "This PC" to "SkyDrive".
This doesn't work on my system. SkyDrive folders have been added to the library, but nothing shows up in the Photos App apart from local files. I even tried making some SkyDrive folders available offline, and still nothing.

