Are you referring to the MR3 prototype or the TR3 prototype?
If it is the MR3 prototype, that was a long time ago and quite a lot of reels later. I have never had issues with water on my solid back MR3 reels. I did dunk them into the ocean when I was testing against the amundson tmx4 cork drag knock off reel. It too was dunked into the ocean. The drag adjustments were smoother on the Islander with better range, but the amundson was still very acceptable. The Islander got jumpy and the amundson locked up and could not turn. I took both reels apart only to discover that the factory had used grease on the amundson cork rather than spec oil. Cleaned both reels up, re-lubed both cork drags with oil and back into the water. They both were working fine, however the Islander was still sightly nicer to operate and battle fish with. I would make the comparison of an AC Cobra Vs. a VW, they will both get you there.
MR2 to MR3, they are two totally different animals. This really does come down to flavors again for the most part. However the MR2 has a much smaller drag disk than the MR3, therefor would be much less grabby when wet. The MR2 has a free spool option which is awesome for mooching and some like it for quick drops on the down rigger, and the odd angler jigs. The MR3 is primarily used on a down rigger and has no free spool. The MR2 has a smaller drag knob than the MR3. The MR2 was primarily developed for mooching, hence the mass line capacity and the reel reason most anglers use backing. Backing is not a requirement on the MR2, MR2-LA, MR3, TR3 reels. The MR2 and MR2-LA reel is right hand retrieve only, while the MR3 and TR3 are left or right changeable. Again all flavors.
I mentioned the MR2-LA. It was introduced as a away to offer a mix of both worlds, adding a nicer, easier to manipulate drag knob, large arbor spool design and still in a nice compact frame the same overall size as it's predecessor with slightly less overall line capacity. Mostly because there are far less anglers running 15 to 20 pound line classes.
Lastly at work we sell way more MR3 and TR3 reels than we do MR2 and MR2-LA reels to the general angling public. Islander to Amundson is pretty even on the overall sales. Its all flavors, it comes down to your preference and the way that you personally fish and what your own personal budget restraints are. When it comes to fishing, I don't have budget boundaries. I buy what I want. I may have to wait to get it, but I will buy it if I decide to. Just flavors...