As I understand it, the algebra filter is based on perl scripts (see perl module here:
http://cvs.moodle.org/moodle/filter/algebra/AlgParser.pm?revision=1.5) that parses text in the alegbra tokens @@\sqrt(4)@@ and converts to tex. This is from the associated filter.....
// NOTE: This Moodle text filter converts algebraic expressions delimited
// by either @@...@@ or by <algebra...>...</algebra> tags
// first converts it to TeX using WeBWorK algebra parser Perl library
// AlgParser.pm, part of the WeBWorK distribution obtained from
// http://webhost.math.rochester.edu/downloadwebwork/
// then converts the TeX to gif images using
// mimetex.cgi obtained from http://www.forkosh.com/mimetex.html authored by
// John Forkosh john@forkosh.com. The mimetex.cgi ELF binary compiled for Linux i386
// as well as AlgParser.pm are included with this distribution.
// Note that there may be patent restrictions on the production of gif images
// in Canada and some parts of Western Europe and Japan until July 2004.
arguably, this filter could as easily be replaced by LaTexML (see http://dlmf.nist.gov/LaTeXML/) which may benefit (or suffer) because of its association with NIST.... In fact I initially thought that this was the way of the future until I bumped into asciimath, in no small part because I have experience programming in perl, not php. I have not turned Mauno on to this (uh oh!!) for fear he will loose focus ;=} LOL
The alg filter still converts to tex and then to gifs, and falls back to mimetex. One could argue that it would make most sense to dump the alg filter, replace it with LaTexML and then Moodle has builtin filters to do either tex to gif or tex to xml, but that might agravate the algebra filter users... though you'd have to look through the tables in the perl module to see if they'd really notice any diff..... my guess is that if swapped out the algebra filter with asciimathml, few would note any diff.....
But I digress .....
the alg filter does not convert asciimath to tex in the sense of asciimathml.... it is converting an ascii text expression to tex, whereupon it is converted to gifs (not pngs....) unless the tex software is awol in which case mimetex is invoked...
As note above.... you can see the tables much as you would see the asciimathml tables in the algparser module.... If you ask me why anyone would use algparser instead of tex I really can't answer, but the discussion of alg filter syntax in Moodle can be found here: http://moodle.org/mod/forum/discuss.php?d=5402
Mathtex has been around for awahile, but when it comes to packaging mimetex is a wider sell (its those MS WIdnows people again, don't you know.... whoops... you deal with Becta so you DO know - LOL) Mauno has been playing with Live Tex as well and I have played around with MathTran.... BUT, OS X IS a unix server, so you only have problems if you insist on working with an OS that is sold by a company arguably without scruples (like BAE or Siemen's , LOL) But mimetex IS fast and easy, and is much more comprehensive at the moment than MathTran (which we tested out as a fallback system for asciimathml as well.)
If I only had a proper job I'd probably talk my employer into letting me do the latexml project ....
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