Thank you Brad for confirming my fears.
I have to admit that I feel cheated by Casio. What's the point of calling the recorder a MIDI recorder if it won't transmit MIDI notes to other instruments?
I believe it is something that could be easily fixed by means of a software update, but I won't be holding my breath.
I bought the CGP 700 primarily because of its keys and integrated sound system...they suit my piano playing style perfectly. I also like the sound of the grand piano and many other factory sounds very much. But not being able to use its onboard sequencer to play external sounds is a egregious oversight, IMO. My CASIO CZ-5000 could do that on the fly more than 30 years ago, for crying out loud!
I guess I will have to cave and get a laptop with a DAW in order to be able to use the cgp700 as a master controller, but I am already dreading the latency and other issues that are inherent to using a computer. But to finish on a positive note, The CGP700 still makes for a terrific stand alone digital piano - with nothing coming even close to it in its price range.