In many ways--pretty much everything on the inside--the Olympus PEN E-PL3 is the same camera as its more expensive sibling, the E-P3. As a result, a lot of the trade-offs I dislike in the E-P3, I'm more willing to forgive in its less expensive little brother. In part that's because I expect people considering the E-PL3 to be slightly less picky about the noise reduction quality of the JPEGs. Plus, if you're paying less you're probably less likely to be resentful about needing to tweak settings.
Like many consumer-targeted cameras, the E-PL3 produces JPEGs that show excessive smear in the details from overzealous luminance noise reduction, where the NR kicks in at ISO 800. But if you can tolerate some grain and a little bit of clipping in the shadows, you can produce much better photos at least up to ISO 1600, possibly higher if you spend a little more time on it than I did. Hot pixels also pop up in the JPEG versions of the high-ISO-sensitivity photos. At low ISO sensitivities, there's enough latitude to retouch underexposed photos without unduly increasing image noise.
Olympus also seems to push the sharpness algorithms in its JPEGs just a hair too far, which makes tiny, light-colored details (like schmutz on a flower) pop artificially. You won't notice this unless you plan to view photos at full size on a display; you won't see it when the image is scaled down and it's probably the appropriate amount of sharpening for going straight to print. And for a more natural look, shoot raw.
Exposure and color are quite good regardless of format, though. Dynamic range is better in the shadows than the highlights--I had trouble recovering some blown-out detail--but it's still pretty good overall.
The video is a mixed bag. Exposure, sharpness, color, and autofocus are excellent. But, like the E-P3, the E-PL3 has a problem with rolling shutter (you know, that wobbly effect). Turning off the image stabilization while shooting video seemed to make a difference--but without the image stabilization it gets pretty jittery. Also, the camera automatically crops the picture while shooting video, effectively increasing the focal length, which makes quickly switching between photos and videos slightly annoying. The combination of interlaced video plus relatively low bit rate also results in poor detail resolution in busy scenes, like splashing water. You can always try to shoot in 720p for those cases, however.
Except for a slightly longer startup time, the E-PL3 performs the same as its more expensive sibling. It takes about a second to power on and shoot--not an eternity but a hair longer than comparable models do. It's fast at focusing and shooting, taking about 0.3 second in good light and 0.6 second in dim. Two sequential shots toddle along quickly as well, at about 0.7 second for JPEG and 0.8 for raw. This model actually has a significantly faster burst mode than the E-P3: we clocked it at 4.7 frames per second versus 2.9fps for the E-P3. All that said, in practice I found the autofocus at least felt slower; despite its sharing the updated AF system of the E-P3, it has less processing power. And keep in mind that the continuous shooting slows down significantly after 11 shots unless you have a 30MB-per-second SD card or faster.