I notice that the commands for Application Inspection differ between FWSM code version 3.2 and 4.0. Would this difference suggest that 4.0 does a better job at application inspection than version 3.2?
You have probably answered your own question, best is to reference new features and improvements added in new releases and do comparisons from previous releases, although it would probably not list every details of code improvements it will defainately give you some insights on major improvements.
