The engine is new and needs some further optimization. So with alot of units on the screen your fps will dive, especially if they're mounted and in a river...for some reason. I have a 3.0ghz, 1gig ram, radeon 9800pro and was getting 20fps in a battle with 55 dark knights on double battlesize last night. Armagan said he was going to work on having the engine not draw units behind an obstruction...so that should help, along with who knows what else will be done. But it is rather odd that i can run Starship Troops with 100 high poly/detail aliens on the screen at once with a good fps, but not M&B with its much lesser graphics. Ah well, still a great game. Oh, and out of curiosity, how good is your X800? I was thinking of upgrading my card for when oblivion comes out, and was looking at either a x700, x800, or x850, but can't decide (really need 256 video memory). Thanks.
Edit: I'd like to add, that i believe the main reason the game feels so laggy at a fps lower than 50 is because your sensitivity changes. Morrowind feels very smooth at 30fps, and i can't tell the difference after 35-40fps. However, with M&B, i can feel it if my fps drops below 80-90, and becomes difficult to control at around 30, seriously imparing my ability to play. Shouldn't be to hard to fix your sensitivity at a constant, so the fps drop isn't as noticable...right?