I figured it was slang for "elite" - but I don't know how it could be used. It's not a disparaging term, so those "evil gamers" would have to use it to refer to themselves, right? The "cool" people would be "l33t"?
I also don't understand "w00t" although I imagine it as sounded like the bark of a retarded dog.
Indeed. As in - I 4m teh 133t h4x0r!
I played so much Quake online my brain was etched with this drivel for years...
I also have never really understood w00t. All I can see, from the people around me who now use it who may be using it in an entirely different sense to it's original meaning, is that it's a cry of excitement or satisfaction.
I think however you are entirely right, and it does remind me of my retarded dog barking, particularly in his sleep.