I've been using the Magic Trackpad for over two weeks now since I asked the question. It can surely replace a mouse for most things except touching up pictures in Aperture. It's really painful to use. Literally. My wrist hurts after editing a dozen or so pictures. (I believe Lightroom or Photoshop users would face the same problem too) Generally, operations involving lots of dragging (like using brushes) is really hard on the wrist while using the Magic Trackpad. An oversight (software-based) Apple made in my opinion is the lack of support for gesture based zooming and rotation in Aperture. (Or maybe I'm misunderstanding something here, but the said gestures don't seem to work in Aperture for me)
However, the Magic Trackpad works exceptionally well for surfing the web and almost everything else. Inertial scrolling and gestures are wonderful; almost feels like surfing on iOS devices. The ability to fly through pages of code and documentation fluidly is also a very productive experience (for programmers). Gesture based zooming is useful too.
So can the Magic Trackpad really completely replace a mouse?
For my use case, the answer is no.
I'll say the Magic Trackpad alone is sufficient only if you don't use a lot of dragging operations such as using brushes within graphics or photo editing software. Movie editing is probably a pain too. Paired with a normal mouse for the occasional dragging would be a more practical thing to do. I ended up using it together with a Magic Mouse and love the complete lack of wires and connectors. Ergonomically, I find using two different input devices (three counting the keyboard) does help prevent the overuse of certain hand movements.