So I exported my image in LR to PS for further editing. Then I made a new smart object via copy. I did some retouching using CS6's cool new Iris Blur and wanted to blend the two smart objects (smart object layers) but I couldn't. I had to raster or flatten the image which was ok since I was done editing. Then I just saved the image since it was flattened. However, if you want to open the image and work on it in the future you need those smart layers. So do I need to save 1 PSD in addition to my flattened jpeg? Where would the PSD reside? I'm new to LR/PS combo and am not finding the workflow very friendly.