Lag may come from 2 aspects, GPU lag and network stack lag.

It occurs to me PS is render engine driven, which IMHO is not optimised and suitable for large projects.

    // start the main event loop
    csDefaultRunLoop(object_reg);

For MMORPG, sometimes even 10fps is acceptable, as long as you do not tie game logic to rendering.
Something like below might be a better choice.

while (!quit)
{
    ...
    doGameLogic();
    doAudio();
    ...
    if (time2render)
        renderOneFrame();
    ...
}


Also, for many players there is no lag when logged in, but more and more lags as time passes. Something not properly cleaned up?