I haven't tried it with an optical mouse. I do have a couple of MS Explorer Optical mice around, but I can't use it yet since they are usb mice and I don't have the usb->ps/2 dongle. The KVM does allow you to connect to the computers using usb, but the master mouse/keyboard has to be ps/2.
I wonder why they don't support a usb master device. Perhaps usb requires a direct peripheral to computer connection so belkin gets around that by having the kvm emulate a usb peripheral and then translate the ps/2 device's input. For a usb peripheral to work, I guess they would need to make the kvm emulate a computer: usb mouse -> kvm computer emu -> kvm mouse emu -> pc usb port. *I GUESS!*
As for the mic input/output thing, the kvm is just a switch box when it comes to the audio inputs... there is no input or output only restriction... flip the switch and the kvm completes the circuit from point a to b.
pc1:
front auido out -> kvm port 1 speaker in
rear audio out -> kvm port 1 mic in
pc2:
front audio out -> kvm port 2 speaker in
rear aduio out -> kvm port 2 mic in
kvm:
master speaker out -> front speakers
master mic out -> rear speakers