Introduction
Segment 3 runs from The Little Scraggy TH off of FS550 to Wellington Lake Rd. It is 12.7 miles long on a great trail. The trail only gains about 200ft of elevation in the first 4.3 miles (8,070ft) before descending to 7,365ft at mile 8. The last parts of Segment 3 will see you climbing steadily, gaining 926ft in 4.7 miles. The best camping opportunities are a spot at 4.27 miles and just about anything in the last 4 miles of the trail (where there are actually some nice flat areas). This segment of the Colorado Trail sees a lot of use from mt bikers. In fact I've always seen more bikers here than hikers.

Trailhead Access
Beginning - Little Scraggy TH
From Denver - From the HWY 285/C-470 interchange near Denver take HWY 285 south for 21 miles to the town of Pine Junction, CO. Turn left  (South) at the light in Pine Junction onto HWY 126. Drive on this paved road for 13 miles until you reach FS 550 (gravel) on your right. Turn right onto FS 550. Immediately after you turn right the TH is on your right. There is a large parking area (probably holds 50 cars) and a bathroom.

Trail Details
Segment 3 starts at the Little Scraggy TH near the east side of FS550. This TH has a bathroom. While in Spring I found many streams along this segment, the only reliable water source is at mile 8.12 where the trail crosses Buffalo Creek. Leave the TH and head west on a great trail. Right away at .3 miles you will encounter a Y in the trail where there is a nice campsite on the right side of the trail. Stay left and travel .3 miles on easy trail where you will cross FS550. Cross the road and continue generally SW. You will encounter a small stream at 1.33 miles. There are some nice campsites on the right side of the trail at miles 1.6 and 1.8. At 1.85 miles you will reach a trail junction with the Shingle Mill Trail 725. If you were to need to return to road FS550, this is a good place to do it. The road is only .2 miles away and is actually visible from here if you look closely. Cross streams at 2.18 and 2.84 miles. At mile 3 you will cross an old 4x4 road where there is a Colorado Trail signpost. Just beyond this junction there is a nice camp spot with a view on the right (Waypoint 17). Cross another stream at 3.3 miles. At 4.27 miles you will find what I think is one of the best campsites along Segment 3 on the right side of the trail. See the photo section for a photo of this site (Waypoint 21). After this area you will begin to descend a bit. Cross another small stream at 5.18 miles. You will then reach a nice clearing at 5.41 miles. At 5.53 miles you will come to a trail junction. The Tramway Trail #223 meets the Colorado Trail here. Stay left and cross another small stream at 5.86 miles. At 6.21 miles there is the first of 2 trail junctions with  the Green Mt trail #772 (left). At 7.1 miles there is a nice overlook (waypoint 28). At 7.5 miles you come to a trail junction again with the Green Mt Trail. Stay on the Colorado Trail and cross a small stream at 7.76 miles. At 7.8 miles you will come to a road that is the entrance road to the Meadows Group Campground. If you look left down the road you can see the bathroom and parking lot from here. Cross the road and continue .1 miles where there is a fence and a trail junction. There is a turnoff here that leads to the Buffalo Trailhead (waypoint 32). Between waypoints 32 and 33 you will reach the low point of this segment at 7,365ft. At 8.12 miles you will cross Buffalo Creek, the most reliable water source on Segment 3. Here you will also cross FS543 (which I believe is also called Buffalo Creek Rd). 
Status Update as of 5/25/2010:
Our Member John (Happy Hikers) reports: After you cross the road at waypoint 33 and go through the fence, the post was there but the sign was gone. Since the trail splits in opposite directions right there it took me a couple minutes to figure the correct direction. You might consider adding wording to indicate “take the left trail” just in case the sign doesn’t get replaced.
The next 1.9 miles will gain quite a bit of elevation until reaching another road junction. On either side of this road there are trail signs. The eastern side (where you came from) sign will tell you its 1.5 miles to Buffalo Creek but this sign is incorrect. It is 1.9 miles to Buffalo Creek. The sign on the west side of the road tells you it is 2.5 miles to Wellington Lake Rd (the end of Segment 3) but it is also incorrect as it is 2.9 miles to the end of Segment 3. I measured both of these distances twice. The trail will continue to mostly gain elevation from here. With the exception of a small stream at 12.36 miles the rest of the segment is pretty uneventful. You will cross the highpoint just before the end of Segment 3 at 12.66 miles. Reach waypoint 36 and the end of Segment 3 at 12.7 miles where there is a nice parking area along Wellington Lake Rd.

Water on Segment 3
1.3 Miles - Stream
2.18 Miles - Stream
2.84 Miles - Stream
3.3 Miles - Stream
5.18 Miles - Stream
5.86 Miles - Stream
6.53 Miles - Stream
7.76 Miles - Stream
8.12 Miles - Buffalo Creek (the only reliable water)
12.36 Miles - Stream