You're right - the Lawman is a lesser-grade Trooper. I did a little bit more research to make sure my dates lined up. This is all old news to most of you, but to keep things in perspective:

1935 - S&W registered .357 magnum (continued as 27)
1954 - S&W introduced the Highway Patrolman, removing features from the .357 (continued as 28)
1954 - Colt had started the 'Trooper' line of .38 special and .22 in 1953. In 1954 they introduced the 3-5-7 to that line, to compete with the Highway Patrolman. The Colt 3-5-7 was built on a smaller frame (same as the following year's Python) than the .357 magnum & Highway Patrolman.
1955 - 1st Python. It seems to me like Colt decided to address both ends of the .357 market with the 3-5-7 in 1954 and the Python to compete with the higher-end S&W .357
1955 - Ruger Blackhawk (traditional Cowboy design, unlike S&W and Colt models)
1957 - S&W Combat Magnum (19)
1981 - 686
1982 - Colt MK V ('V' frame - smaller than the Python & MK III, replacing the Trooper which hung on until 1983)

Generally, new products are an attempt to compete with an existing product (a response), or an innovation to grab a new niche. Sometimes these responses are delayed for a variety of reasons. I always read the 686 as a delayed response to the Python. It didn't have to be as good or as expensive - it just needed to take away market share, or to fill in a niche that didn't previously exist. Perhaps S&W couldn't build a perceived competitor for the Python until 1981 because they weren't willing to incur the cost, but when they could, they did. And didn't the 686 finally kind of kill the Python? (like a mongoose?)

Disclaimer: the above doesn't consider the impact that Ruger, etc., had on the dynamics of the .357 market.

edited to add Ruger Blackhawk to the mix
edited to add that the Colt 3-5-7 was built on a smaller frame than the .357 magnum & Highway Patrolman