This same thing happened with a previous update and this fixed it for me:
Running the updater appears to start working up until it just quits. After it quit I looked inside the PS folder and saw that a new file was there named pslaunchmacosx.zip. Well, I unzipped it and took out the new files inside and replaced the old files of the same names and locations in my original PS folder. They were: pslaunch.app, pslaunch.zip (insiide Art folder), and pslaunch.xml (inside the data, gui folder). Then I started the new pslaunch.app, and it just checked files and said everything's good

Then PS started like usual except for the new skylab server showing up instead of fragnetics. I only was logged for about 5 min, but it seemed smooth and no lag from here on east coast of USA.
Apparently, the new server is down right now, just got a server failed so came here to forums. Oh, I have 10.5.3 Mac.