Hey Instinct,
I am currently a cadet in a modular Academy in the S.F. Bay Area, so I think I can answer some of your questions.
Level III does focus mainly on Academics. There is a requirement for 8 hrs of Arrest and Control Techniques (might be 12 hours I can't remember exactly) and some range time. I think this Section is about 80 hrs long. P.T. is not technically required until Level I, but my academy started P.T. the second week 
This section takes care of the P.C. 832 requirement, which is required for anyone who can issue a citation and security guards. You can't do much as a Level III Reserve, pretty much just administrative stuff. Most agencies do not have Level III Reserves. The Level III Reserves that I know of are members of a civilian mounted patrol/search and rescue or are former explorers that are planning on going through all three levels and the agency is letting them continue to be part of the department in the mean time.
Level II Reserves can go out in the field if they are supervised by a Level I Reserve or a full time officer (this may have changed, but to my knowledge this is the current law). As a Level II Reserve you are allowed to act as a cover officer and can be armed. In our area I don't know of many places that have Level II Reserves and there are some Level II Reserves in my academy, but they are all in the process of becoming Level I.
Level I Reserves have full peace officer status, but the agency policy may limit what duties they can perform. There are agencies I know of that have Level I Reserves that are allowed to patrol on their own and are paid. I also know of agencies where the Level I Reserves are similar to adult explorers.
How do the two programs compare? Well from my experience the modular program tends to be a little easier when it comes to P.T. simply because if you need to work on getting into better condition, the academy is longer and you can work out on you own during the week. At the same time if you are not self-motivated this can be your down fall. Same thing applies to academics. There are parts of the academy where there is a test every day. Since you are not going to the academy m-f, you have to be on top of your studying.
I went to a regular police academy and I've found that at the modular academy they do not baby-sit and ride your a** as much. They understand that most of the people in the class work full-time and that you're adults who chose to be there. They expect you to be squared away, but are not going to hold your hand. So if you don't keep up with your P.T. during the week and can't pass the Physical Agility Test at the end of the Academy, you’re out of luck. The academic and physical requirements are the same for the both types of academies and you receive a POST Regular Basic Course Certificate making you eligible for hire as a full-time LEO.
If you do attend a modular academy and you want to go through all three levels, make sure that that academy is offering all three levels. There are a few academies in the Bay Area that only offer Level III & II. We have a couple guys in our class who had to wait over a year to take Level I.
Good Luck!
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