Is this paragraph a shortcut so people can skip the real prayer?
In the old days it came close. The Tur quotes Rav Natronai Gaon (a head of a great Babylonian academy in the 800s): the Kaddish after these verses meant "the prayer is finished," so whoever wanted to leave could leave. Behind this is an old argument over whether the evening Amidah is required at all. The Vehu Rachum page at the start of Maariv tells it.
Now the explanations. The Rosh (Rabbi Asher ben Yechiel, a leading medieval rabbi) says the synagogues were in the fields and people feared to stay late. He calls it the custom of the ordinary people. Rabbeinu Yonah (another medieval rabbi), as his students recorded, says that because the evening Amidah was optional, people said these verses, ended with Kaddish, and left.
The Tosafot give a gentler reason. While the verses are said, a friend can pray his own Amidah, and no one leaves until everyone is done.
The Arukh HaShulchan (written around 1900) says these explanations describe one situation. Evening prayer was optional and people were afraid, so they began to treat it lightly. But it was hard for them to pray nothing at all, so they said these verses, while some still prayed the full Amidah.
Does it replace the Amidah today? No, the Amidah comes next. The Rema (Rabbi Moshe Isserles, who added Ashkenazi custom to the Shulchan Aruch) records a custom to stand for the verses, because they were set up in place of the 18 blessings. But the Mishnah Berurah (a commentary on daily Jewish law, written around 1900) reports that many later authorities say it is better to sit, so no one thinks the verses are meant to count as the Amidah.
Tur, Orach Chaim 236, quoting Rav Natronai Gaon,Abudarham, Evening Service, quoting the Rosh,Rabbeinu Yonah on Berakhot 2b (Rif pages); Arukh HaShulchan, Orach Chaim 236:7-8,Tosafot on Berakhot 4b,Rema, Orach Chaim 236:2,Mishnah Berurah 236:10My friend's shul skips this paragraph. Which of us is doing it wrong?
According to the books, neither. At the end of his explanation, the Tur adds a note: some of the great rabbis had the custom not to say it. The Taz (a major commentary on the Shulchan Aruch) names them, following the Beit Yosef: the Ramban (Rabbi Moshe ben Nachman, a leading medieval Torah commentator) and the Rashbam (Rabbi Shmuel ben Meir, a medieval Torah commentator).
Why skip it? Peninei Halakhah (Rabbi Eliezer Melamed's modern guide to Jewish law) says they did not want a break between the redemption blessing and the Amidah. The Gemara praises the person who connects the two. The Abudarham (a commentary on the prayers) adds that Rabbi Yitzchak ibn Giyyat (a medieval scholar) held the verses should not be said, for this reason, and that the Rambam wrote the same. Yet the Rambam's own order of the prayers, at the end of his law code, does include them.
The Kaf HaChaim (a Sephardic law commentary from the early 1900s) reports, citing an earlier book, that the custom of the Sephardic communities (Jews from Spain and the Middle East) in Constantinople and Tire, in Turkey, was not to say them. He adds that the words of the Arizal (the great Kabbalist of Tzfat) point the same way. Peninei Halakhah says that most communities had stopped saying the verses by the end of the medieval period, and that today few in Israel say them. Siddurim for Nusach Sefard and Nusach Ashkenaz both print the paragraph, as this one does.
Why say it, then? The Tosafot argue that since the rabbis set the verses up, they count as part of the long redemption, not a break. The Abudarham, right after listing the doubts, says the custom was already in place, and the custom of our fathers is itself Torah. And the Magen Avraham (a major commentary on the Shulchan Aruch) calls it only a custom, so someone who arrives late may skip it to join the Amidah.
So the books treat it as a custom, not a law. Each community follows its own line.
Tur, Orach Chaim 236,Taz, Orach Chaim 236:2,Peninei Halakhah, Prayer 25:4, note 2,Berakhot 4b,Abudarham, Evening Service,Rambam, Order of Prayer 1:9,Kaf HaChaim, Orach Chaim 236:12,Tosafot on Berakhot 4b,Magen Avraham 236:3Can I really say "Blessed is God" when the day went badly?
This paragraph opens with exactly that problem. Tehillim 89 starts by praising God's promise to King David. Then it turns: God has cast off and rejected the king, and the poet asks, "How long, Hashem?" Near the end it says, "Remember, my Lord, the insults aimed at Your servants." Two verses later comes the one you say first: "Blessed is Hashem forever. Amen and Amen."
The commentators noticed the jump. Radak offers two readings: the poet saw the return from exile ahead of time, or it is simply the line that closes a book. Ibn Ezra (a medieval Torah commentator) gives similar readings and quotes a third from others. Like Iyov (Job), they say, a wise person blesses God even while an enemy insults him, and bears the insult.
The Mishnah makes this a rule: bless God over the bad just as over the good. The Ve'al Kulam page, in the Amidah, looks at it closely.
Here is a connection you can check. The words "May the Name of Hashem be blessed" (Tehillim 113:2) are word for word what Iyov says in Iyov 1:21, right after he loses his children and his wealth.
Near the paragraph's end come four short lines: by day, by night, when we lie down, when we rise. That covers the whole clock. None of these sources says it feels easy. Tehillim 89 leaves the complaint right there, in the verse just before the blessing.
Tehillim 89:39-53,Radak and Ibn Ezra on Tehillim 89:53,Mishnah Berakhot 9:5,Tehillim 113:2; Iyov 1:21,Tur, Orach Chaim 239