<< I heard other photo printer ink will smudge even if you print it on the photo paper. >>
Not true, at least with the HP. I printed around 2000 photos last fall and I'm doing around 1000 for a wedding right now. If I continue to do this much more I'm going to have to invest in a color laser though. Cost per photo will be much cheaper.
I've also got an Epson Stylus 1520, I think the HP photo quality is much better. Maybe the reason you think the HP isn't better is because you're using PhotoREt instead of 2400x1200dpi mode. PhotoRet produces good images if you are lacking in the memory department but the only way to get good results is to use 2400x1200dpi mode.