For the original poster - when to use a iii and when a III?
One possibly helpful way is to think in terms of "tension" and "release". As you are playing, you build up tension (say V7) and then you resolve (release) it (V7->I). The way I think of it, "release" chords are chords you can "rest" on, and spend a beat or two on. "Tension" chords are the ones you want to resolve straight away.
So, at least for me, the iii is usually a rest/release chord, the III (most ofter III#5#9) is a tension chord, which you usually want to move away from, to go to the vi (which is the relative fourth).
Example:
"Rest iii" - beginning of "Anointing, Fall on Me"
E/BDG Anoin iii - rest - note how you spend two beats here
A/ACE ting vi - rest
"Tension III" - beginning of "As the Deer"
CG/CEG As the I - rest
BEb/ADG deer VII#5#9 - tension - one beat and resolve to the relative fourth (III)
EAb/CE pan.. III#5 - tension - one beat and resolve to the relative fourth (vi)
/D teth
AEA/C for... vi - release
Of course you can mix this up as much as you want.
Hope this is helpful.