I didn't post a reply only because I know nothing about restoration firsthand. The only bags I've bought are current season bags (until tonight, that is, hee hee).
However, I'm always happy to give an opinion! LOL
I think prospective buyers fall into two camps -- the ones who want bags in original condition, meaning the leather wasn't treated with conditioner or Shine Restore or anything. These buyers won't buy a treated bag and they won't buy a restored bag, either.
Then there's the other camp -- of which I'm a member -- which is if it looks good, who cares if it's been restored or not, as long as the seller was upfront about it during the sale. I've seen some excellent restorations up for sale (like torn-corner repair) and honestly I couldn't tell the difference between the repaired torn corner and the intact corner. When I saw those bags I thought, "I'd buy that if I wanted that style/color."
It's kind of like antiques -- some folks want their antiques completely as-is, dings and all, while others want their antiques restored closer to their original beauty.
And on your last point, I've heard such great things about LMB restorations (and seen the results) that I wouldn't hesitate to buy one of their restored bags. And if I ever see a bag at auction that I really want but is in terrible condition, I wouldn't hesitate to buy it and then send it to LMB. I think I read in one of the posts here that they do a "total restoration" for about $300 or so -- so I would make sure the bag's purchase price reflects the necessary outlay for restoration.
Hope that helps!