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In terms of overall performance, the LX3 is quietly impressive. It starts up in a little over two seconds, and in single-shot mode at maximum JPEG image quality it has a shot-to-shot time of approximately 1.7 seconds, which is fairly impressive when you consider that it's moving files averaging about 5MB each. Even more impressively, shooting in the Raw mode with its 11.5MB files the LX3 can maintain a shot-to-shot time of 1.8 seconds, and even in the Raw + Fine JPEG setting it can manage a shot every 2.3 seconds. I've used some DSLRs that can't shoot that fast.
The autofocus system is also extremely impressive, both for its speed and for its amazing low light ability, which is among the best I've ever seen. It has a small and not terribly bright AF assist lamp, but even so it is able to focus in almost total darkness seemingly as fast as it does in daylight.
The LX3 has a distinctive pop-up flash which is surprisingly powerful for such a small unit, with a wide-angle range of over eight metres at auto ISO setting. It is bright enough to provide shadow fill-in even in very bright sunlight, but is also very well metered so it doesn't burn out close-up highlights.
The Leica-branded lens is simply fantastic, producing virtually no distortion or chromatic aberration, although to be fair some of that is achieved during processing. Nonetheless images are pin-sharp from corner to corner, with an amazing level of detail. The LX3's sensor is of the larger 1/1.63-inch type, the largest normally used in compact cameras (Sigma DP1 excepted). As a result the LX3 has better than average dynamic range and outstanding colour reproduction.
As for image quality, see the sample shots attached and judge for yourself. I'm not exaggerating when I say that the LX3 has better image quality than some DSLRs that I've used. Images at 80 ISO are pretty much perfect, with deep rich colour, sharp detail and no noise at all, and the quality is maintained even at higher ISO settings. It is one of the few compact cameras that can produce useable images at 1600 ISO. The auto white balance is really the LX3's only significant problem. It does tend to produce slight tints if there's a strongly-coloured object dominating the frame, but this can be avoided by either manual WB setting or shooting in Raw mode.
The Panasonic LX3 is one of the very few digital cameras that I would consider buying for myself. It is a superbly designed and immensely capable all-purpose compact that will satisfy any keen photographer, but is also capable of producing good results in the hands of a novice. Build quality, performance and versatility are all of the highest order, and image quality is as good as ever gets. It may seem expensive, but I think it would be money well spent.
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