I think making internal promotion a clear possibility- indeed, making it something that feels like a preference- is what I strongly prefer. I think that is probably more work for the manager, but I have felt like I have done a lot of good work that has been treated as a matter of course, and have had people less qualified and capable brought in above me.
I might well be the kind of worker as the guy you are talking about from your perspective, and I may not be 'manager material'- but when the lines between manager and worker are blurred and you bring in someone who is not obviously any better than me, I feel overlooked, especially if I feel like you didn't even consider me or talk to me about it. So, from my perspective, the guy is in the right here.
What does that mean? I really don't know. I am sure that, for me, it means I need more humility and to appreciate where I am at. What does it mean for you?