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As far as people being hidden to reduce lag time, Graal is using an engine where I don't think drawing is the most optimized and then they allowed people to have wild and crazy GIFs for hats and such for some reason.
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Even with the crazy GIFs the actual FPS hit is minimal on the old PC client (that the clowns should have made the default client for PC, not some horrible flash client that ended up driving people away). Even then, I think the flash client could still handle it performance wise.
It was all done because of the induced network lag but I don't remember the details.