As you said limiting your frames doesn't reduce lag, it simply makes everything running at lower frames so the difference between a 120 fps screen, and 30 is less noticeable, but the problem is still there.
I've also this kind of problem, very low performance on very low settings with a medium-high system (and this game hasn't got good graphics at all compared to modern games, but is still very demanding), it seems to me that once you exceed a certain number of players in a server, or you play a plain map where you can see really far your fps drops a lot, which isn't good for a game like this.
If u limit ur framerate to 30 fps u can't have stable 60 fps but only 30! And like Horsa said before "30 fps isn't fine if your monitor has a refresh rate of 50-60, it has to be 60+ to be unnoticeable."
Or maby that has no effect and the reason is something else?! - That is only a powersave-function and no solution for a overloaded graphic board.
