Not sure if I should enter my sense of these things, which isn't that extensive, but this is what I've understood so far:
Player Creation Modifiers (PCM) set the overal skill set (or potential) of players upon creation. If you have a PCM value less than 1 for power hitting, then any player created will have less power, on average, than what "major league" quality players can achieve. A value of 1 is default for modern MLB in OOTP.
Major League Equivalency (MLE) sets the current ratings and/or quality level of the league in question, and act as an evaluation guide in regards to the development of players. MLEs for minor leagues are adjustable to set this quality, but not PCM because it is assumed that all players created under this system have major league talents, just not developed yet. MLEs, in a way, determine if, when, or how fast players reach their potential (as dictated by PCM).
ctorg is right that both PCMs and MLEs affect both current and potential ratings.
A league with PCM average of 0.2 and MLE of 0.2 has very little chance of creating/developing a player that would succeed or get in MLB (with PCM and MLE averages of 1.0). In other words, you wouldn't expect a player to have a 100 power rating on a 1-100 scale. A league with a PCM value of 1.0 and MLE of 0.2 could be considered a league below Rookie level, but with players of MLB potential. It's just that they'd need time and development to obtain their potential.
Is that right?
