FLC OF ACR LGT ACFT LANDED BELOW RPTED WX MINIMUMS DUE TO AN INACCURATE AWOS WX RPT.

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AS WE APCHED THE HDN ARPT; THE AWOS-3 WAS CALLING THE WX 8 SCATTERED; 14 BROKEN; 23 BROKEN WITH VISIBILITY 1 1/4 MI. BECAUSE WE WOULD NEED 1 1/2 MI TO TKOF ON RWY 10; WE ELECTED TO HOLD AS PUBLISHED OVER THE HDN VOR AND TRY TO TALK TO OUR DISPATCHER. WE WERE UNABLE TO REACH THE DISPATCHER ON THE RADIO. MEANWHILE; ANOTHER ACFT LANDED AT HDN AND RPTED THE VISIBILITY AT 3 MI. ZDV ASKED IF WE WOULD LIKE TO TRY THE APCH. WE SAID YES AND HE GAVE US RADAR VECTORS TO THE RWY 10 ILS. AT 9000 FT AND PRIOR TO CAPTURING THE GS WE HAD THE RWY IN SIGHT. AS WE DSNDED ON THE GS WE CHKED THE AWOS-3 AGAIN FOR THE CURRENT WIND. AT THIS TIME; THE AWOS-3 WAS CALLING THE VISIBILITY 1/4 MI DESPITE THE FACT THAT WE HAD THE RWY IN SIGHT OVER 9 MI OUT. IT IS POSSIBLE THAT THE AWOS-3 WAS CALLING THE WX AT LESS THAN 3/4 MI WHEN WE BEGAN THE APCH; BUT WE WEREN'T CONTINUOUSLY MONITORING IT. THE LCL GATE AGENTS SAID THAT THE AWOS-3 OFTEN CALLS THE WX MUCH LOWER THAN IT APPEARS DUE TO A NEARBY PAPER MILL AND THEY ALSO SUSPECTED THE LENS SOMETIMES FOGS OVER.