Canon's "Automatic Lighting Optimization" and "Highlight Tone Priority"
 

While thoroughly reading my T1i's manual again, I have found two things of interest to me:
"Auto Lighting Optimization"
and
"Highlight Tone Priority"

Of course, I went onto google and did a quick search, but some places were skeptical of it and suggested that it was to be kept off at all times, while others said it should only be used when shooting Jpgs (and off when shooting Raws).

I don't get it... what exactly do those options do? and more specifically, have you guys experimented with it?

Auto Lighting Optimization is Canon's version of Sony's Dynamic Range Optimization, but nowhere near as good. It's kind of like HDR, but not quite. It tries to not blow out the highlights and block up the shadows.

Highlight Tone Priority extends the range of capture in the highlight areas - it's great for shooting white wedding dresses, as it can keep highlight detail at the expense of possible noise in the shadow areas. Again, it's not as effective as the Sony or Nikons.

The settings apply to the JPEGs, not the RAW files, although Lightroom/CS4 will apply the settings to RAW conversions, but you can easily adjust the effect.

i thought I knew my camera pretty well lol.

When it doubt, always look through dpreivew:

http://www.dpreview.com/reviews/canoneos500d/page18.asp