Funny you should mention that about the manual tool switch. I've never used the individual tools, I always grab the multi-thing cause it always works (until now). I just tried using the one that has the wrench icon and it worked....weird..

I've also had the "Smart tool loses its functionality when comping" happen on rare occasions...you're not going crazy.

The Smart Tool is great for when you are flying around doing various tasks but I find it much easier to toggle to the dedicated tools if I'm going to be doing a lot of something and don't want to worry about hotspots or if the ST is giving me a hard time. I mostly toggle between the Smart Tool and the Move Tool. Remember too that if you right click on certain tools in the HUD some of them have different modes as well (meaning they turn into completely different tools). Many of those hidden functions are extremely useful or sometimes the ONLY way to perform certain tasks. Even if you don't end up using them the Tools entries in the user manual are very eye opening.
 
Cheers.

I had something similar happen as I was comping a vox track recently.  Turned out to be that the 'paste into existing clips' option had gotten changed somehow.  Switched it back to 'blend new with old' and everything went back to normal.
 

Thanks everyone!