The highlighted word will be automatically entered if you just swipe the next word. So the only time you need to select a word using a tap is if the highlighted word isn't the one you want. And if the word you want isn't in the three options, simply backspace and try again.
So, the best way to type is to always look at the highlighted word and swipe without looking at the keyboard. Tap or backspace as required.
Aside: Another trick is to position the cursor at the end of a word and swipe to replace the previous word with a new one.
Yes.... But Swype predicts what the next word is and gets better as you use it more. The only way to see what the next word that is predicted is to click on the word of hit space. Of course I can just keep swiping, as I am doing now. I will say touchpal is very accurate and I am starting to like this more then the SWYPE keyboard.
One question, does it automatically add new words and can you edit ones that are a mistake?