Ok, I got the code working the way i wanted but had to make some alterations.

First of all - I'm definitely going to have to have a separate power supply for my board as it keeps resetting at full throttle. Even with PWRTE set.

I had to change:

Code:
Width var byte  

to 

Width var word
Since the 2µs resolution puts it well beyond 255.

And after a few minutes of just looking at hundreds if not thousands of pulses on my Logic analyzer it hit me

Look for the on pulse > turn the light on

Look for the off pulse > Turn the light off

Here is my final code:

Code:
define osc 20                        '20Mhz oscillator 

CMCON = 7                           'Turn off Comparators

Width var word                      '@ 20Mhz channel 3 is 1900µs in the on state. with 2µs resolution thats a value of 950. byte only holds a value of 255. 

Main:
       Pulsin Porta.0, 1, Width                                          'Wait for a high pulse store the pulse width in the variable "Width."
           if (Width >= 925 ) and ( Width <= 975) then          '1900µs is on state. 1900µs /2 = 950
              high porta.1
           else 
              goto Check_pulse
           endif
           goto Check_pulse

Check_pulse:
        Pulsin Porta.0, 1, Width                                          'Wait for a high pulse store the pulse width in the variable "Width."
           if (Width >= 475 ) and ( Width <= 525) then           '1000µs is off state. 1000µs /2 = 500  
              low porta.1                                                    'If channel 3 is indeed in the off state turn the LED off. 
           else 
              goto Main
           endif
           goto Main

Thanks for all of the help.