Scalesusa, could you clarify if the noise improvement you are referring by an improved processor, is acting before the raw file has been created during the analog to digital conversion, or after the raw file has been created ?
I am assuming that this improvement is done before the raw file has been created otherwise any pc will get a better image. Also, if this is so, There must be a limit on how much processing power the perfect algorithm needs, so once reached, a better processor won't give any improved noise, and only a better sensor can improve it. I am curious how far we are from such a limit. Is this correct or not ?
This was a quote from a Canon white paper explaining the improvements in the Digic IV over Digic III.
Raw images do not have in camera processing, the data from the sensor is processed in your pc. This is a simplification, but basically true.
The processing part is where the camera produces jpeg images from the Raw data and saves a jpeg image to the flash card , or perhaps in addition to RAW data. That in camera processor is nowhere near as powerful as a pc, and, since it has to process the images on the fly, it is limited as to what things it can do.
By processing RAW images in your PC using some of the high powered software available, you can apply selective noise reduction to parts of the image, have a huge range of control over colors, more comtrol over brightness, contrast, and a host of controls to opptimize your image. you can work on one image at a time, or set the process to run on all images.
The software keeps getting more powerful and continues to keep even high powered pc's loaded down. I do not expect to ever see the processor in a Camera keep up with what a PC can do, but, as in camera processing improves, so do jpeg in-camera images.