I remember that the third season was highly serialized, but I forgot how much it veered into this direction. A few of the episodes could be watched on their own, but you'd lose out on so much of the story (which, I suppose, is a good reason to have the musical recap). The season is broken down into three very well-defined arcs: Enzo's struggles to become a Guardian; Matrix and AndrAIa's search for Bob and Mainframe; and the final fight to save Mainframe. Each arc is 4 episodes long, and are identified via the episode number (for example, 3.1.3 or 3.2.1 - Season 3, Arc 1, Episode 3, etc).
By far my favourite episode is "The Episode With No Name", mainly for the stand-off between AndrAIa and the female guardian. A close second would be "Showdown", for the extended fight sequence between Matrix and Megabyte. The whole season was very cinematic, and had parody-after-parody. I mentioned that season 2 shed the cartoon quality of season 1, but season 3 takes that to another level entirely.
Lastly, I'm glad I stuck with the Mainframe Chronicle podcast and gave them a chance to get better. The chemistry between the hosts improved a lot, and they both feel a little looser. There is still a lot of recitation of wikipedia factoids, but the hosts actually bring some personality to the episodes and relate some of their own stories. Their best episode was Episode 10 - The Visitor, where they had a guest from another podcast join them. I think it helped to loosen up the regular hosts quite a bit and made an impact for the following episodes.
As I said, I've still got season 4 to watch, but I've started working my way through Beast Wars (or Beasties, as it's better known in Canada). There's another podcast running that I'll be listening to as well - it's called the Transformers Beast Wars Podcast. It looks like they're still releasing new episodes, as the latest was out June 2nd. So far after listening to 1 episode, they're doing what I hoped a ReBoot podcast would have done.