Hello Bruce,
You have asked some good questions. Perhaps I could start by writing that 'RAW converters are not all equal', the title of my contribution to the February 2016 BLP newsletter. In the article I show that Canon DPP4 produces lower noise conversions for some Canon cameras than LR/ACR. For me, this finding was a big deal and was one of the reasons I continue to use DPP4 for my RAW adjustment and conversions. The core function of a RAW converter is to take the RAW image data, which will usually be in a proprietary file format, and faithfully convert it into a universal file format for output. The most important part of the conversion process is the demosaic. Each pixel in the sensor array has a little colour filter in front of it so that it records data for only one colour channel. For example, a pixel may have a red filter in front of it so it only records the value of the red intensity in that part of the image. Neighbouring pixels will have green and blue filters and over the entire surface of the sensor there is a regular array, or mosaic, of red, green and blue colour filters. The most common pattern of colour filters is called a Bayer array. In order to faithfully record an image having the maximum detail, it is necessary to estimate the value of the green and blue intensity at the location of the red colour filter and so on. The missing intensity data is estimated based on the measured values from surrounding green and blue pixels. There are many ways to make this estimate with some more accurate than others. The accuracy of the estimate also depends on the shape of the object being imaged, for example, is it a sharp edge, a filament like a whisker, or is it a repeating pattern like the barbs of a feather. It turns out that there is no perfect algorithm for estimating the value of the missing colour values and this leads RAW conversion engineers to make compromises the result of which is that the image after conversion will have a little blur and a little more or less noise depending upon which algorithm they use and the nature of the object. Many different demosaic, noise reduction and sharpening algorithms are used to convert RAW files and there are noticeable differences in the resulting image quality.
To build the best conversion algorithm it is a great advantage to know all the details of the design of the colour filter array, the micro-lens in front of each pixel, the infrared blocking filter, the optical low-pass filter, the sensor electronic properties, and the signal chain electronics. Only the camera manufacturers know all this information and they are therefore in the best position to develop RAW conversion algorithms. As well as that, the big camera companies know more about RAW conversion and adjustment algorithms than any other group in the world, it is part of their core competency to know how to make fast and faithful RAW conversions both in-camera in near real time and in the RAW adjustment and conversion software that they make available to their customers. This certainly seems to be borne out in the case of Canon DPP4 and I expect it to be the case with Nikon Capture NX-D.
You asked why RAW conversion software provided by Nikon and Canon does not provide a comprehensive suite of image processing apps. My guess is that the camera companies don't see this as their core business. Their main concern it to enable users to get the best, clean, RAW conversion and let specialist third-party providers supply comprehensive image processing software for finishing the image. In this regard the Adobe Photoshop products are among the best so why not have the best of both worlds; the best RAW converter running into the best image processing software for finishing and output. And you asked what kind of finishing I do in PSE14. To understand this you need to be aware that the adjustments made in DPP4 and NX-D are global adjustments and therefore only enable 'broad-brush' adjustments; they enable one to do a good job of getting the image looking about right but there are often minor tweaks that make it even better. I particularly have in mind local adjustments like brightening up the face of a bird, sharpening up an out of focus tail, increasing the saturation of a bird's eye skin and other kinds of 'eye doctor' work. Then there are plug-ins for a huge range of adjustments, a few of which are useful for our kind of work. In particular, there are noise reduction plug-ins that can do a better job than the standard options available in PSE and there is a 'detail extractor' in the Nik Color Efex Pro suite that some bird photographers like to use.
I hope these general thoughts are helpful to you Bruce and any others who might be watching this thread, best wishes,
Ian