After experimenting with, and listening closely to "Enhancer" quite a bit lately, I can safely say that it lowers the midrange as it adds reverb to it, and also compresses the rest of the audio even more than it has already been. To my ears, it takes a lot of the "punch" (dynamics) out of the music. For most applications, it is better to leave it unchecked. However, it is actually handy for late night listening, as you don't have to play with the volume knob as much during musically "loud" moments.
That being said, I found a sweet spot (a little to the right of the 'low' setting) that I've been using more and more, especially when I have company that wants to converse. It seems less intrusive, somehow.
To sum up, I think iTunes should just call it "Compressor" and perhaps avoid some of the confusion regarding it.
ASJ