I've been away for several months and I went back to using windows XP. When I launched the client I expected to be hit by the lag issues that all XP users used to suffer from... but I didn't. Instead its been really smooth so far, and what's more, I've been sitting in old lag-infested places such as south-gate and I've been getting 30fps. What's more, I was able to set the view distance to full in several places and still sit comfortably with 50fps.
So, I don't know what changes were made, but whoever did them deserves a medal in my opinion. I never expected the horizons client to ever be free of the old silo-farm lag issues, but I can't remember any time in the last few months that I've been so glad to be wrong about anything.