I just gave it a run. Logged on pretty smoothly, bit of lag after about 20 minutes of play, but not quiiiite as bad as when I started. Then I fell off a cliff while chasing a pig :\
I suggest a weee bit more tweaking. The lag I was getting was quite unbearable at times, but like I said, not as bad as it was before.
Addendum: Adventure's Log: Jan 6
Set off from the unfinished house in Spawn Town (I had decided to spend most of the day previous marveling at the progress made in the old land you guys live in

) after a night of rain and thunder. Deciding to make another attempt at the fabled continent Chieftess had told me of, I walked cliffside until I found the arrow.
Fairly certain I was lined up with the arrow, I set off. Not much went on in this section, besides a few squids.
I see land! I am overcome with joy, as I get out, and notice my boat is floating away. No worries, an outpost will be set up here over the next few days, and crafting a boat will be as worrisome as the mobs that haunt my porch back home in Barleyridge. I set out, eager to see the beauty of the land that awaits me.
Oh ffffff- its an island of pine trees, and its getting dark.
Quicky crafting a shovel and a pick, I set to work on a cubbyhole to hide in for the night. This inevitably gets boring, so I bore further down into the land, to see what I can find below me. *Grunt* *Grunt* *Squeek* *Rattle*
Oh, hello massive cave system. I'd love to get to know you better, but I only brought one torch, and its probably daylight by now. *Scurries back up the stairs*
So, I found my boat still floating in the shallow waters near the island, got in, and set back off.
Roughly 5 minutes after setting sail, I see another island. this one flatter. This one...familiar. I realize, this is Egg Drop Island! This is where I took Zelet, and in the end doomed him to a watery grave! Well, tomorrow I'll make an attempt to make it back home, but I plan on finding the possible abandoned mine under the sea on the way, too.
Anyone brave enough to come tackle it with us is more than welcome, but be warned...sinking straight down depletes all bubbles and one heart.