I was actually surprised when I decided to use Fraps to test my fps the other night. While Fairhaven (Tryker capital) as expected was hovering in the 10-15 range, out in the terrain I was often not much over 20, but somehow the game managed to feel a lot smoother without suffering noticably from choppy movement and animations (unlike a certain other game I gave up betatesting after a few days - even when I did reach 20 fps, at very low settings, smooth was not the word that sprung to mind
).
I run the game on a P4 2.6 with 1 Gb RAM (looks like this is almost a must in mmorpgs these days if you don't want to torture your harddrive and suffer from "stalls" when entering crowded areas) and a Geforce FX5900 XT.
Besides of course using high textures (128 Mb) I have most of the settings a bit above the middle. I could set them higher and do fine away from cities, but I do not want to bother lowering them every time I visit Fairhaven.
The degrade in quality with medium settings in this game is not harsh at all though, but has a great impact on performance.
I am a bit surprised by the couple of posts I have seen around with people on <2 GHz systems and Geforce 4s or similar finding the game to run smooth at highest settings (some of them apparantly even with AA and AF turned on). I am guessing they are still on the newbie island
. Performance will most likely drop somewhat once you hit the mainland, but in general the game runs great.
And it is incredibly beautiful.
Oh, and regarding "lag". I think we are talking low or stuttering framerate (graphics "lag") and not actual net latency here. I think even a modem should do fine here - personally I use a 256 Kb line and I get no network related problems. What I do see is my graphics card struggling a bit now and then.