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According to the Google help page referenced in the article, it is on by default, but you are notified when it happens. Pictures aren't overwritten; new ones are added.

It hasn't changed at all. I have it enabled, its funny sometimes. The 2013 year end video brought a tear to my eye, and it changed some beach photos by adding in snowflakes (must have thought the white sand was snow).

I should note that I don't have any special information about AutoAwesome, so my knowledge is based on the blog post.

The author seemed to be surprised which makes me think it was unplanned, but I might have just been reading into it.