| Under the hood of olsr...    
After further research into this and looking under the hood in 1.1.x BBHN release, it is a different ball game from my first post.   Introduced in the 1.1.x release is Device to Device (DtD) bridging of nodes with a cat5 network cable.   This requires usage of the "ffeth" Link Quality (LQ) algorithm which is incompatible with prior methods.  "ffeth" was added to handle ETX values < 1.  '1' is considered a perfect RF link and this algorithm uses '0.1' value for ethernet links.   
Trivia:   ffeth = Funkfeuer/Freifunk (the guys that wrote the implementation) + ethernet support in olsr
 So what is the algorithm used to determine Link Quality (LQ) which is used to calculate Expected Transmission Count (ETX)?
 Short answer:  The  % of the last 32 Hello packets received from a node (in ~64 seconds) + bias due to several packets lost in a row (link may have dropped so don't wait ~40 secs before declaring it dead)
 Long answer:  here's the code :) :
 
 /* calculate link quality */
  /* LQ_FFETH_WINDOW = 32 */
  /* lq.valueLq = 255 is 100% LQ and 0 is 0% LQ */
  244     if (total == 0) {
  245       tlq->lq.valueLq = 0;
  246     } else {
  247       // start with link-loss-factor
  248       ratio = fpmidiv(itofpm(link->loss_link_multiplier), LINK_LOSS_MULTIPLIER);
  249  
 250       /* keep missed hello periods in mind (round up hello interval to seconds) */
  251       if (tlq->missed_hellos > 1) {
  252         received = received - received * tlq->missed_hellos * link->inter->hello_etime/1000 / LQ_FFETH_WINDOW;
  253       }
  254  
 255       // calculate received/total factor
  256       ratio = fpmmuli(ratio, received);
  257       ratio = fpmidiv(ratio, total);
  258       ratio = fpmmuli(ratio, 255);
  259  
 260       tlq->lq.valueLq = (uint8_t) (fpmtoi(ratio));
  261     }
  262  
 263     /* ethernet booster */
  264     if (link->inter->mode == IF_MODE_ETHER) {
  265       if (tlq->lq.valueLq > (uint8_t)(0.95 *  255)) {
  266         tlq->perfect_eth = true;
  267       }
  268       else if (tlq->lq.valueLq > (uint8_t)(0.90 * 255)) {
  269         tlq->perfect_eth = false;
  270       }
  271  
 272       if (tlq->perfect_eth) {
  273         tlq->lq.valueLq = 255;
  274       }
  275     }
  276     else if (link->inter->mode != IF_MODE_ETHER && tlq->lq.valueLq > 0) {
  277       tlq->lq.valueLq--;
  278     } 
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