I see you work for VMware, so I recommend that you just talk to vSphere Replication developers, because this is where I got all my information from. They actually had a great session at VMworld 2012 with lots of technical details about how it works in depth, with lots of pictures and long Q&A afterwards.
The "hidden" snapshot is called LWD in VMware terminology (Light Weight Delta), and it does exist. Again, you don't have to take my word for it, just talk to your devs directly.
You have provided a very long and confusing explanation, so instead of trying to address individual misstatements, I think it will be best for me to approach this from a different angle, which will be easy to understand for everyone even without having to know specifics of the particular implementation.
Here is how I like to explain this. It is impossible to perform asynchronous replication without some sort of snapshot created for the duration of data transfer, because you must have means of protecting a replicated state of the VM image, while replication of that state takes place (which can easily take minutes). And this is not possible without some sort of snapshot even in theory. Simple as that! Now, synchronous replication is the whole other story, blocks are replicated immediately as they are modified, but this is NOT what vSphere Replication does.
As it comes to marketing papers (LinkedIn says you have a marketing role at VMware), it is perfectly acceptable to state there that vSphere Replication does not use snapshots (because most users think VM snapshots when they hear "snapshot"). However, we are not discussing technologies on the marketing level on these forums, but rather a few levels below that
Now, don't get me wrong: no one here says LWD approach is bad. As I've said above, LWD is better than using regular VM snapshots, and is much better than the approach one Microsoft implemented for Hyper-V replica. But every technology has its pros and cons, and it is important for VMware to be very clear about both with the technical audience.
Gostev wrote:PROS: No commit required, snapshot is simply discarded after replication cycle completes.
CONS: While replication runs, there is 3x I/O per each modified block that belongs to the replicated state.
Also, while you are here, do you care to comment why VMware would not open LWD API for the 3rd party vendors to use? As you can see above, your users would like 3rd party vendors like Veeam to be able to leverage this technology.
Here at Veeam, we've put our bets on integrating with storage snapshots, as only this can help to completely eliminate I/O overhead on replicated VMs during the data transfer window... but the obvious CONS of our approach is that it is limited to certain supported storage devices only. And even though we are constantly expanding this list, having access to LWD would enable us to deliver universal engine we could failover to in case of incompatible storage, thus enabling 100% of our joint customers to have better VMware-based data protection strategy.
VMware vExpert 2013