Arch,
My GX200 just came. According to the manual, Distortion Correction doesn't work with RAW or the JPEG recorded with RAW. There are other caveats:
-Distortion correction may change the angle of view.
-DC won't apply if conditions don't warrant it, even if enabled.
-DC won't work with continuous or movie shots
-DC doesn't show up when you review shots on the LCD.
I just did a very quick and dirty test shooting a wall at 24mm f.l. I did two JPEGs, one with, one without distortion correction. DC really did straighten out the "barrel" distortion at the edges. I made no accurate measurements, but to the casual glance things are nice and straight.
As to file size, the DC jpeg was actually slightly smaller than the uncorrected one, but since I wasn't using a tripod the images weren't exactly the same so I don't think I can draw any conclusion--other than that the difference, if any, was small.
Since I shoot only RAW I'm not likely to spend much time with further experiments.
Regards,
Ed