> The general understanding of pretty-printing is that it should
	> confine itself to adding and removing layout characters (space, tab,
	> line break) and colouring.
	
	I have no idea what is the "general understanding of pretty printing," 
	so thus I shall defer.
	
I mean, of course, the literature on pretty-printing, going back as far as
the NPL pretty-printer and as current as the pretty-printing combinator
libraries for various functional languages.  Grind, Blaise, Indent, PasMat,
... there's a lot of it about.  Think Pascal was loved (and equally hated)
for pretty-printing on the fly in the IDE.

The other thing, where you take a parse tree and generate source code from
it, is conventionally called "unparsing" or sometimes "generation".

	I never found use for a pretty printer, except perhaps to
	facilitate the reading of large hunks of awfully written code.

Exactly so.  There's a lot of it about.  

	To that end, any
	decent-looking semantically equivalent code sufficed.  Since even the 
	worst of Smalltalk code is usually much smaller and more comprehensible, 
	the pretty-printing tool seems particularly pointless in Squeak even as 
	a general editor.
	
Even Smalltalk has parentheses and brackets.  Pretty-printing can be a
useful check that you have them in the right place.  I have used it for
that purpose fairly often; the most important feature is the ability to
revert to the code the really beautiful (:-) way I had it before.