Tight or not, a L/S will never be the same as a locker. If a locker is what you want, the L/S will probably disappoint.
The Aussie does seem like a good unit from everything I've seen also, but it is true you will be able to tell it's back there on the street (more so with a stickshift than with an auto). Most people do get used to it though. It also doesn't have as much slop in it as say, a Detroit Locker.
The ARB compressor does not give you onboard air. It is about worthless for anything else. I know a LOT of people who have ARBs, none have used it for that purpose - all either have PowerTanks or A/C conversion setups.
I can tell you from experience fixing other people's stuff on the trail that the ARB is cool but not very reliable. There are a shit load of parts, seals, air lines, etc. Seal starts leaking inside the diff and it stops working. I would look at a tight trac-lock, Detroit, or electric locker for reliability. Or just buck up and buy a lunchbox locker, take your pick of any... Aussie and the Spartan are supposed to be pretty good.
4 ARBs owned over the last 13 years (still have all but one), not a one has ever given me an air or seal-related problem. Care during installation is the key here, a twisted or nicked O-ring would cause leaks like what you say (and I would agree, installation errors do seem to happen fairly frequently with them).
Also, there are two different size compressors available. The smaller of the two is the one that's unsuitable for airing up tires, etc. The larger one (which is what I have) works fine for that purpose, though it still is slower than an A/C compressor-based setup.