I know Fuji says this,
but I wonder what LMO is doing under the hood in addition to applying optical corrections based on the maker's notes metadata. I suspect the additional magic is just deconvolution sharpening, which many of the raw converters offer—at least as an option—in their sharpening controls.
Well yeah, but you can do that sharpening on any image taken with any lens.
From what I'm reading LMO is probably some form of sharpening which is applied (optional) to the jpegs only. I don't think it's a bad thing if you only shoot jpeg, as I suppose it's more efective to do this sharpening at the moment of conversion to jpeg than after. If anything this should a Fuji advantage for jpeg shooter as there seems to be only advantages from it.
However my reply was to the comment that because Fuji applies LMO their lenses are better regarded. As I shoot just raw (since LR got their colors right) I don't get the benefit of LMO and most people who really talk nicely about Fuji lenses shoot raw also. Truth is many of the Fuji lenses are quite nice.
PS. the software correction of optical distortion is applied more and more, on m43, Fuji, Leica APS-C, etc.