Leet speak orginally had a real purpose, other than the use by hacker/cracker
wannabe's as we see today. Leet speak is a
bastardization of the
roman character set developed by
crackers to foil automated
packet sniffers looking for certain words. The idea was to produce a string of text that is significantly different from the intended message, but was still readable by humans.
"Leet speak" works by switching between upper and lower case and replacing numbers for letters (0 -> 'o', 4 -> 'A', 3 -> 'e', etc.). This produces text that is still (somewhat) readable by humans (you do have to get used to it), but is extremely difficult for automated programs to determine the contents.
For example, take the text "leet speak is used by elite crackers". If you were to write this as leet speak, it would look like:
l33t $P34K !5 Us3D bY 31337 cR4x0rs
If you look real hard, you can see the message. However, to an automated program, the normal word "speak" looks like this:
737065616b
and the leet speak version ("$P34K") looks like:
245033344b
Computers only see numbers, and to a computer, they are nothing alike.
You will also note that the number '5' was not always used as a replacement for 'S'. This slight variance in style makes it nearly impossible for an automated program to determine the message, yet a human would have little difficulty in decoding it.
Leet speak is basically a weak form of encryption. I think the concept is nifty, but I still find its use annoying. Jeez, if your messages are that secretive, use PGP or something...
To address the "it just ain't so"...
Back in the time before the "internet" became mainstream (read early/mid 80's), there existed another type of system called a BBS. This is where this style writing came from. Most BBS's where connected in some way to exchange info. If you where on one BBS, you could send "mail" to another individual on another BBS. Back then, a surprisingly large portion of the talk on a lot of these BBS's where cracking. Specifically how to hack into an external system. Before the internet, all you needed was a company's dial-in phone number and you were at the login prompt. No firewalls, nothing.
The crackers figured that BBS's have thousands and thousands of messages. The only way "the authorities" would ever be able to track the cracker's activity was by automated search programs. So, to foil these search programs they came up with a way of obfuscating their messages.
Soon after, the WaReZ d00dZ on the BBS's picked up on this code and just assumed that it was the cool thing to do.