Elements 3 is a really capable program. I only have direct experience with older version of elements, and I know that a lot of functionality has been added into Elements, but the one thing I believe it still lacks is "curves." I cannot imagine editing without this very basic but incredibly powerful tool. There are ways to add this function into Elements, and if you decide to go that route, you should look into that. Photoshop CS2 is what nearly all professionals use for editing, however the list price is very steep, >$600. If you qualify as a student, you can get it for, I believe, around $299. I believe there was, maybe still is, an offer for upgrade from Elements to CS2 for recent purchasers of Canon cameras. You may want to look into whether this path is still available, since you would qualify (you obviously purchased recently, given that the XT has not been out that long).
Either of those paths would make it a no-brainer, IMO, if you're wanting to learn the "industry standard" editor. Though Elements is similar, there will be a learning cruve if you switch from Elements to PS CS2.
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