>Anyone know if the IQ would be better in camera with the 1/3 >crop than croping on the computer
There's no difference. I prefer to crop in post because then I have a choice about which pixels to remove. By comparison, once a photo has been cropped in-camera, that's it. I can't put back pixels that weren't captured in the first place. Post-process cropping gives more choices.
To paraphrase the 14th century proverb: For want of more zoom, some pixels were lost. For want of more pixels, resolution was lost. For want of more resolution, some details were lost. For want of more details, some sharpness was lost. For want of more sharpness, the subject was lost. For want of a more recognizable subject, the photo was lost.
I always advise photographers to get closer and shoot tighter. Make a photo of the subject rather than everything surrounding it. Photographers should always zoom with their feet before they zoom with their lenses. If water is blocking the way, zoom with a small boat or buy some hip waders. If a fence blocks the way, ask permission to climb the fence and get closer. If crowds of people are blocking the view, get up higher. I think that photographers should always remove as much air between them and their subjects as possible.
Then again, sometimes we're as close as we can get, or it's a shot-of-a-lifetime-right-now sort of situation. or there's too much of a chance that getting any closer would disturb the subject(s). Then and only then is something like the D7100's 1.5X+1.3X crop mode recommended. It happens often enough I suppose.
Suppose I'm shooting birds in flight with my 300 f2.8 R in DX mode. Let's say for the sake of argument I'm at 1/1600 f5.6 ISO 500. As it happens, the bird is too far away, and I have to crop. Now, alternatively let's assume I'm shooting with the 1.3x crop. To get the same DOF I'll shoot at 1/1600 f4 ISO 250. This shot will be cleaner than the crop above. But note that if I intended to crop anyway I could have shot with the "full" DX frame and cropped in post. In theory: but it often doesn't work that way in practice.
I played with the 1/3 crop at an indoor Equestrian Event. The images are just as good as croping latter to the same size. It saved me a lot of post processing. 15MP (good enough) takes less hard drive space and email easier.
Another thing to think of was that I used only the best (center) of the glass in my old 70-200 lens. This eliminated any vignetting or other distracting edge items such as overhead lights.
Presumably if you are using matrix metering the metering system will ignore anything outside the cropped area. That could lead to better exposures in some cases. (But I'd verify that before relying on it!)