Yes, plugs are made from whole leaf, done early in tobacco processing. When you press already prepared tobacco it makes a cake, or as Simon and Dan (of SToP) have named it the "chug" for very tightly pressing cut tobaccos.
I think that the idea is more to slow the burning process, making it denser, thus burning slower or at a higher temperature if pushed too hard. But, by slowing the rate of smoldering, you get more of the nicotine and flavors from a slower smoke and a more homogeneous tobacco. But, for the most part it doesn't change the tastes dramatically.
Also, try slicing a cake or "chug." you don't get very good slices most of the time, and it sort of crumbles apart as you pack it. I am all for getting new and different smoking experiences, but I just haven't had one of these that has impressed me. And, I do have a 10 ton hydraulic press. I also have a friend in my pipe club who makes a sort of fruit roll up thing where he presses his tobacco absolutely flat between wax papers. It's not very.. aesthetically appealing, especially since he uses aromatics. So it is literally like a fruit roll up.
But, as always playing with your tobacco is a lot of fun. So, do it. Try for yourself. My favorite thread for pressing is the one where the forum member tried parking his truck on his tobacco.