I was headed that route... buying a sub $100 P&S. I even spent a little more for the TZ5 superzoom... great range and good IQ but still P&S limited..
For me it didn't work. I grew frustrated because I felt so handicapped after shooting for decades with advanced cameras. Yes... I was creative but still felt limited. It took a while (shot with G1, G3, G5) but panasonic finally delivered a camera that fits the bill; great optics, wide angle, raw, advanced features... A camera that fits every-day-life. (I'm still a fan of the G-series but they are just not compact enough)
I'm hoping this market segment continues on. Canon and their S90, Sigma and DP1, Ricoh, and Leica with their X1, it looks like a market segment that is growing somewhat.
Do your research all are quite different in terms of features and have something great to offer. Any specific questions on the LX3, I am more than happy to answer. It has seen just about as much use as my rangefinders.