Image quality is generally good. Olympus sensors and lenses work well together to optimise the sharpness and detail within images. Colour and exposure too are generally well maintained, though the camera does on occasions underexpose a little, but this has the benefit of maintaining highlight detail, especially in contrasty conditions.
Personally I like the tones within the images, but find adding a touch more contrast helps to elevate the images a bit more, there's a softness to the tones that suits some subjects, but not all. There are controls to customise the contrast, saturation and so on within the menu, but they are generally less controllable than doing it yourself on the PC.
One of the best things about the camera is the noise control in the lower ISO range, though this deteriorates as the gain is raised. ISO 100 and 200 are fine, with nicely smooth tones, but by ISO 400, noise begins to show, especially in shadow areas. At ISO 800 it's obtrusive and ISO 1600 is usable but noisy, and is a far cry from the low noise of Canon CMOS sensors.
This isn't a major upgrade by any means and wouldn't warrant a switch from the E-510, but if you're looking for a feature packed midrange DSLR, the E-520 is worth considering. The improvements, particularly the new image stabilisation mode and autofocus accuracy of Live Modes show that these important technologies are still being perfected, and the latest versions on the E-520 are pretty much as good as they get at the moment.
Olympus still has problems with noise though, and this is letting down the full potential of the four-thirds system. As the push towards higher resolution continues, and competitors offer 15MP at similar price points, Olympus is going to encounter further difficulties as the photosites get smaller potentially leading to more noise. This can be seen with all of its 10MP models, and the E-520 is no exception.