Overall photo quality from the ZR3 is very good for a compact camera. At its lower ISO sensitivities, photos are sharp, with good fine detail and little if any visible noise. At ISO 400, subjects appear softer and there's a slight shift in color. Some fine detail is preserved, though, so you can still get good 4x6 prints as long as you don't do any heavy cropping or enlarging. Pictures taken at higher sensitivities are OK; good enough for Web use, but there is a noticeable increase in noise and softness.
The ZR3 has a High Sensitivity mode for shooting in very low light. It can capture up to a 3-megapixel image using ISOs from 1600 to 6400. This was taken at ISO 6400. The yellow blotches are from noise and occur even at lower ISOs in this mode. Basically, it's there for getting a shot without using a flash, but the results aren't good for much.
If you like to take close-ups, the ZR3 can focus as close as 1 inch from a subject. Results look a bit oversharpened, but not horribly so as to ruin photos. There is a Macro Zoom option, too, but it uses a digital zoom to get closer, which in turn hurts photo quality.
Color performance is the weakest part of the ZR3's photo quality and in the end is what brought its overall rating down. They looked a bit washed out and slightly inaccurate in my test shots. However, that's not to say they aren't pleasing, and for many people they'll be fine. Plus, if you like punchier colors there's a Vivid setting that'll get you those. White balance is very good, other than being a little warm indoors when set to Auto. Exposure is also very good, and Panasonic's Intelligent Exposure does a great job of rescuing shadow details without overexposing highlights.
When shooting in Intelligent Auto you get only a handful of settings to play with. One of them is color modes, but Vivid isn't one of the options. Instead, you get Happy, which increases color brightness and vividness. The top photo was taken in Normal mode, the bottom in Happy. The difference is subtle, but if you want less-natural-looking colors, it's worth playing with.
The ZR3's 25mm-equivalent wide-angle lens show a little asymmetrical barrel distortion on the left side. Likewise, when the lens is fully extended, there's slight pincushion distortion. Neither problems are bad enough to be concerned about, though, and sharpness is good edge to edge.
Using its Intelligent Resolution feature, Panasonic boosts the zoom range of the ZR3 from 8x to 10x. It's called Intelligent Zoom and it's basically an enhanced digital zoom. The top photo was taken at the optical zoom limit of 200mm. The bottom shot is using the iZoom at 10x. (The photos on the left are 100-percent crops of those on the right.) The results are actually pretty good as far as getting you a little closer digitally. Then again, at 100 percent they aren't that good to begin with.
This is Intelligent Resolution in action without enhancing zoom. The feature targets outlines, detailed texture areas, and soft gradation in photos and improves them for overall clarity. These are full-size crops of the inset images. The top photo is with the feature off, the bottom with it on and it definitely makes improvements to those target areas.