Due to limitations in place by Apple, Photosmith cannot directly access the Camera Connection Kit (CCK) via the USB connection. Per Apple, only Photos.app can ingest/import photos into the iPad from the CCK connected to either the 30-pin or lightening USB connector, depending on your model of iPad.
When you plug in a camera or flash memory card into the CCK, the Photos.app will automatically launch, regardless of what app you currently have open. Photos.app will prompt you which photos on the CCK you want to ingest. Once ingested, you may then import these photos into Photosmith, either as copy or link.
You cannot import photos from the Camera Connection Kit (CCK) directly into Photosmith, nor can you work "live" on photos contained on the camera or flash memory without first ingesting into Photos.app Camera Roll, then import into Photosmith. This is a limitation put in place by Apple.
So, in brief the workflow is: Camera Connection Kit (CCK) -> Photos.app (Ingest from Camera/Card) -> Photosmith (Import from Photos.app Camera Roll).
Yes, this is a major impediment to effective and efficient workflow, and one that we wish Apple would reconsider. We're at their mercy.