We study the problem of designing optical receivers to discriminate between multiple coherent states using coherent processing receivers-i.e., one that uses arbitrary coherent feedback control and quantum-noise-limited direct detection-which was shown by Dolinar to achieve the minimum error probability in discriminating any two coherent states. We first derive and re-interpret Dolinar's binary-hypothesis minimum-probability-of-error receiver as the one that optimizes the information efficiency at each time instant, based on recursive Bayesian updates within the receiver. Using this viewpoint, we propose a natural generalization of Dolinar's receiver design to discriminate M coherent states each of which could now be a codeword, i.e., a sequence of N coherent states each drawn from a modulation alphabet. We analyze the channel capacity of the pure-loss optical channel with a general coherent-processing receiver in the low-photon number regime and compare it with the capacity achievable with direct detection and the Holevo limit (achieving the latter would require a quantum joint-detection receiver). We show compelling evidence that despite the optimal performance of Dolinar's receiver for the binary coherent-state hypothesis test (either in error probability or mutual information), the asymptotic communication rate achievable by such a coherent-processing receiver is only as good as direct detection. This suggests that in the infinitelylong codeword limit, all potential benefits of coherent processing at the receiver can be obtained by designing a good code and direct detection, with no feedback within the receiver.Over time t ∈ [0, T ), consider a coherent-state input of constant amplitude S to a pure-loss optical channel, where S ∈ C, and |S| 2 T is the mean photon number. Coherent state is the quantum description of light generated by an ideal laser. In a noise-free environment, if one uses an ideal quantum-noise-limited photon counter to receive this optical signal, the output of the photon counter is a Poisson point process, with rate λ = |S| 2 over the time period [0, T ), indicating arrivals of individual photons. Clearly, one can generalize from a constant input to an arbitrary temporal-mode shape of the coherentstate pulse S(t), t ∈ [0, T ), which if detected with an ideal photon counter would result in a non-homogeneous Poisson process of rate λ(t) = |S(t)| 2 . The mean number of photons,T 0 |S(t)| 2 dt, expended in the transmitted pulse, is the natural metric quantifying communication cost. A photon counter with sub-unity detection efficiency η ∈ (0, 1] can be modeled as a lossy channel of transmissivity η followed by ideal photon counting. Further, a coherent state at the input of a lossy channel appears as a coherent state at the output of the channel with its amplitude scaled by the channel's transmissivity η ∈ (0, 1]. Therefore, without loss of generality, in this paper we will assume a lossless channel and unity-efficiency photodetection, with an implicit scaling of any constraint imposed on the t...