There are essentially two ways to create a link:
#1 You enter the link's text, select it, click the link button (or CTRL-K), and choose the link target.
#2 You click the link button first, enter the target and get out of the dialog, at which point the link text (identical to chosen link target) will be entered.
I'm not sure which method users prefer, but it's clear that both methods should work seamlessly. However, with the current setup both methods are problematic:
#1 Once the correct target has been picked (either by entering it, or by selecting from the list), it is not quite clear what the user should do next. Is the back arrow the right thing to do, or does that cancel the selection? Should I simply click outside of the dialog, or does that cancel? It turns out: if the target was selected from the list, both these actions are correct and do not cancel the choice, but if the link target was entered by hand (and not followed by Enter!), both actions do cancel the choice. The fastest way is to enter the link target and hit Enter twice. This is all fairly unintuitive.
#2 With this method, the user will often have to adjust the link's text afterwards, for instance in the case of plurals or if the target article is disambiguated with parentheses. But it is not clear to the user that adjusting the link text is safe and won't create a broken link; indeed the crucial distinction between link text and link target remains obscure. (Changing a singular to a plural is especially difficult since editing links at the end is not allowed.)
I have checked the workflow of entering links in LibreOffice, Gmail and Word; they are all basically the same as in the Visual Editor, with two major differences:
a) the dialog popup window has a clear OK button, and
b) the dialog popup window contains separate clearly labeled boxes for the link text and the link target.
I believe both of these changes make a lot of sense.
When entering the dialog from an existing link or from highlighted text, that text should automatically be entered into the link text's box, with a corresponding suggestion for the link target preselected, but both boxes should be editable independently. The link target box should have a list of further suggestions underneath. Once everything is OK, clicking the OK button or hitting Enter should create the link; clicking outside of the dialog box or hitting the back arrow should cancel the action.
There is another minor issue: right now, when hovering over an existing link, the link target is displayed in a popup; when clicking on the link, a separate link symbol popup occurs which does not show the link target. The meaning of that symbol is not clear; it turns out that clicking on it will open the dialog popup, allowing to change or remove the link. Gmail solves this issue as follows: hovering over a link will not display anything, but when clicking on a link, a tiny popup appears giving the link's target and options to change or remove the link. I find that completely self-explanatory.