Tank, I believe the K&N is generally recommended for service other than in dusty and sandy areas. K&N's breath better because they are more porous (cotton gauze), but that also allows more harmful particles through the filter and into the engine.
Like spark plugs, you will feel an improvement when you put a new one in. I don't believe the hype about K & N filters giving a performance improvement over a new paper filter. I do have one though and it has paid off for itself by cleaning and reusing. Make sure you don't use too much of the oil!
For added air flow, take off the plastic piece that goes into the fender well. Cut the plastic to allow more air in through the larger opening and replace. You will also hear more aggressive air flow and still have the "cold" air intake.
I didnt notice anything either, but I think its basically due to the type of application. I did install a k&n in my dad's LHS and that did make a noticable diffrence. Id say about 15hp in that application, but in a LC, i think you'd probably only get about 5 hp. Probably helps a little bit with highway travel, but other then that i dont know if its really worth the money.
Beween the TRD and K&N, I prefer the TRD. It has a larger OD like the OEM paper element and it appears to have more surface area than the K&N. I have found that the oiled filters provide a bit crisper throttle response. It also seems that the boost comes up a tiny bit quicker (subjective observation). In dusty conditions I prefer the OEM paper element.
Do be cautious when using oiled filters on vehicles with heated-wire air flow sensors such as the 95 up 80 series and Tacoma/4Runner. An agressivly oiled filter will foul and possibly ruin the sensor. I have seen several vehicles with airflow sensor issues caused by oiled air filters such as K&N.
Naturally any warranty coverage is nul because of the filter in use....
Thanks everyone for the replies! Well, tune up is done and after several #6's we have decided (drum roll please)...........FRAM IT IS! OEM it is for now. Decided until I put a snorkel on, I'll wait on the TRD/K&N. Thanks everyone for their imput.