Thanks Melanie for the quick reply- valuable advice and correcting my flawed assumptions.
This is an even stronger endorsement of mosaics than I was expecting.
You seem to suggest that there really is no performance or analytical advantages to raster geoprocessing with an SDE raster versus a mosaic dataset that references files on disk (particularly when data is stored as tiff ).
THat the only advantage to the SDE raster dataset relates to the additional layer of security afforded by an RDBMS.
Thanks for the info about the World Elevation services beta program. I guess we will just need to comparison test to see if the network requirements of using this image service provides comprable performance as to accessing a Mosaic dataset on a local server.