Marilyn > Doesn't the presence of heightened levels of serum cholesterol
indicate that there is plaque deposition taking place because of
arterial inflammation in the body?

High levels of small-dense LDL --- which as Todd pointed out is
correlated with high triglycerides -- means that damage is being
repaired somewhere in the body.

> And normal low levels mean that the cholesterol is being utilized in routine maintenance functions throughout the body.

Correct.  Cholesterol is analogous to bandages.  You walk into a room
and there's bandages everywhere.  That's a sign that someone is not
well.  You don't, by the way, give the order to "Remove these bandages
immediately!" and expect that the patient will get well.  This is what
modern medicine does with cholesterol-lowering drugs.  It wants to get
rid of bandages instead of figuring out why the patient is needing
bandages.

> Or, do high levels of serum cholesterol simply indicate higher intake of dietary cholesterol?

They're almost unrelated.