Digital Light & Color

Is it intentional that the ability to display and move the alignment points is different depending on whether the overlay image is the same or different from the input image? I found this difference to be confusing.

Yes, it has always worked that way.

After using the transformation where the alignment points behaved as described in the documentation, I happened to use the same image for the input and overlay and then spent a lot of time trying to figure out why I couldn't find the alignment point on the overlay image. It was also annoying that the transform did not retain the zoom setting when I switched between input and overlay. I think it would be good to have the alignment point behavior be the same, and not depend on whether you have chosen the same image for the input and overlay, but if there are reasons for not doing so, it would be good to see more in the documentation about the difference.
An additional point with respect to the composite transformation. When you are using the split display and you shift from input to overlay, the highlight in the image tree shifts, and the text at the top of the left panel changes, as well as the In Ov buttons. All these clues are fairly subtle, particularly if you are looking closely at the image itself. I slightly more obvious clue would be for the left panel momentarily go blank before it displays the changed image.

If you really want compositing an image with itself to work the same as compositing with another image, you might try making a copy of the image and compositing with the copy.

Yes, that is what I now do. I was just thinking about keeping PWP 8 as easy as possible for people to learn.

I fixed this for the next release -- it was a hold-over from PWP 7.