fmarriott,
Most of the info for what you're asking about is written up in this other post in the HowTo section:
What methods does PE use for collecting data on opponents?
http://forum.poker-edge.com/viewtopic.php?t=1843
PE doesn't use your old hand histories per say... and the PE servers don't collect on every table for us... per say. The PE servers do collect/datamine many tables... I'm pretty sure that most of their PE server direct datamining is of cash tables on a few pokersites... but I'm not privy to exactly which pokersites or exactly which stake levels.
Other than the tables that the PE servers datamine directly... all datamining of tables and players is accomplished "in realtime" by PE members playing at tables... and PE members watching/datamining tables that they aren't playing at. Every player sitting at those tables is being collected on. PE does look at handhistories but only in realtime. They don't use our old hand histories (like PT does).
So a couple days a week I'll watch 14-16 tables on FullTilt at my stake levels... for several hours. I do this so that I'll have data on the vast majority of opponents at the tables I play at. At the highest stake levels there aren't very many "new" opponents... so I end up with data on 90% or more of the players. At the lowest stake levels there are more new players so I end up with data on 70-90% of the pkayers. So I'll see thousands of hands on some guys, hundreds of hands on some guys, some with less than a hundred, and 1-3 with zero data collected on them so far. The ones with thousands collected on them tend to be regulars at higher stake levels. The ones with zero data have never had a PE member collect on them before. You started at 800 or so hands because a PE member has collected on some of your tables in the past. And because the data is kept in a centralized database... you benefit from my data collecting... and I benefit from yours... if we play some of the same stake levels on the same sites.
PE is working on a new approach where they will datamine all tables from their PE servers... and players won't need to datamine anymore. But by all I don't know if they mean all cash tables or all cash/sng/mtt tables. And we don't know exactly when they'll put the new server architechture in place.
Hope this helps,
DM