"to bypass AOL profanity filters and psuedo-encrypt message so as to be dificult for the "non-leet" to read"
Even though that does not describe what the word "1337" means, it a godo attempt nonetheless.
Basically it is a stereotypic manner of writing the English language. "1337-speak" is, in a general sense, when you substitute several letters with other, less recognized characters (i.e. if I were to write "I had won" or "You are a hacker," I would instead write "I h4d w0n" or "j00 r 4 h4x0r). This type of writing style (and probably even a subtle substitue for the English language, even) is more common with sites concerning hacking or sites about playing games (preferrably, playing games on the internet). This language is easily understood when you either a) understand all substitues for all standard English characters, or b) when you can see a pattern (I mean as if j00 c0u1d und3r574nd wh47 I'm 54yin9).