is none of the audio processing done by PT handled by the hardware when using a 002/ 003 (or even a fraction of it)?
nope, just conversion.
why not settle for an m-audio interface and use PT m powered, or why spend on a 002/003 when all it has is more in/outs?
that's kind of a big topic.
what you're touching upon is the situation digi found themselves in when avid acquired m-audio. digi released PT-M for those m-audio devices, and suddenly there was market confusion over how PT-M and PTLE relate to each other. iow, the lines are too similar.
there are a few s/w differences between M and LE, but not that many. one that's important to me is that LE offers lower latency times. also, LE is free (if you purchase the corresponding hardware). for those who already owned M-Audio boxes, and wanted PT, it made sense to buy M. for those just starting out, i don't think it's really clear at all whether to go M or LE. and imho that's a big problem for digi.
i'd like to think that digi is going to move LE closer to HD, to make it a clear mid-tier product. but they don't listen to me
the other reason i use LE is because i was already using it when m-audio was acquired. i don't see any reason for me to switch to M (why pay for another hardware piece and have to shell out for the s/w?), nor does digi expect me to. i also don't think digi expects anyone to "upgrade" from M to LE. at this point, it really seems to be a matter of letting people pick their hardware.
back to your question, digi markets the LE hardware as having higher quality components (i.e. mic pre's and conversion) than the m-audio stuff, but i don't know if that's necessarily true. and i think it's still true that the cheapest way to get PT is to buy one of the smaller LE boxes, since the s/w is bundled free. yeah, it looks like the mbox mini is $300 (LE included) and PT-M s/w is $250, but you still have to shell out for the interface.
not sure if all that really clarified anything