I was developing a slide presentation program called slide show at that time. It was essentially a database driven program for handling and keywording large amounts of images. The program could generate slide shows, it would put images in a folder together with an XML file telling the program what to do with them. I added some options to the XML to adjust small issues found in replay. I than realized I could add raw conversion and do most in processing in my program. But that would involve a lot, really learning about color spaces and management and so. I also guess it's easy to mess up.
Than Lightroom came along, and did things in mostly the way I wanted.
The way it is my preference is pretty much to work parametrically. I don't want to go over 16-bit TIFFS. I also much prefer to do most of the work in Lightroom, I don't raw conversion and process in Photoshop, unless needed.
Since "Madman Chen" is on the ACR team, things go in the right direction. Now we have lens corrections, can do keystone corrections in develop, and we also have some tone mapping capabilities (although the latter are poorly described and documented).
From my perspective, Lightroom is a very nice light-table, filing and printing program with a good-enough Raw converter. If you want superlative Raw conversion, and only raw conversion, you can often get it for free with the manufacturer's software eg. Canon DPP, freeware like RPP, or resort to boutique products like Iridient's Raw Developer, or even Capture One which I believe quite a few people on this forum have used.