The camera will certainly getting better with the time. Martijn Braam, a postmarketOS dev is already doing a very good job improving the software side of the problem with his Megapixel application: https://blog.brixit.nl/pinephone-camera-pt4/.

For me it's the LCD screen versus an AMOLED that is a big blocker on mobile devices.

But as I understand for now this will probably mostly be used by hackers and developers themselves, not as a daily driver for lambda users who are conscious about freedom and privacy yet, so the hardware choices make sense.

Definitely needs a better camera before I could consider it. A jump to 20MP, and then perhaps forking OpenCamera rather than developing one directly for Pine might be a good way forward.

Does Pine have any recommendations for auto-cloud backup of photos, to replace Google Photos? (Photos is one of the killer apps for me - I could live without the cloud features, but the seamless cloud sync is a major feature.)

Operating systems for the Pinephone use the same software packages as desktop ARM Linux. So if it runs in the Raspberry Pi, it will run on your phone. Nextcloud is a nice option for seamless cloud sync.

I haven't used plasma-mobile yet but in UBPorts you can sync your photos with your Nextcloud instance. Another option is Syncthing.