I could not replicate your problem from my machine, but I have a similar issue with some of my files; when hovering over large MTEXT objects, the Selection Preview Visual Effect lags. I used to think it only happened if the object was placed in paper space, but I just tested it and the issue seemed worse from within model space. I am running a decent system, especially for 2D CAD.
Windows 7 64-Bit
Intel Quad-core i7 3.07 GHz
16GB RAM (8GB Usable)
NVIDIA Quadro FX 580
My display adapter is not on the high-end, but is purpose built for "productivity graphics" applications, i.e. CAD and has the latest AutoCAD performance drivers installed. Installing the latest AutoCAD performance driver seemed to help a little in paper space, but model space seems worse.
When using a True Type font, the problem goes away. When using an SHX font, like monotext, the problem returns. The problem also seems to be amplified by zoom level.
As far as line and move commands etc., I would suggest turning off Dynamic Input if you haven't already tryed that, as that is going to tax any system from what I have seen. Even with what I have, it noticeably lags sometimes. Usually it does not hinder productivity on my system, but I have seen systems that are heavily affected.
OK so, clarification : the super slowity slownless in paper space is only when i have checked in the page parameters "show plot style display" or something to the effect (i use the french version acad). anybody know why it slows down just because of ctb display??
I've had this same proplem of a real slow down in Cad speed when inputing lines or editing text etc when in paperspace and displaying plot styles. I've narrowed it down in my case to a shortcut ('Add-A-Plot Style Table Wizard.exe') in our plotstyles folder which is trying to link to the programm 'styshwiz.exe'. This shortcut has been updated for full autocad 2012 but I'm running 2011 LT on my computer therefore the shortcutis broken and this causes the slow down. As soon as I remove the shortcut from the plotstyles folder or correct it for my 2011LT version of the 'styshwiz.exe' program then everything runs fine. Hope this may be of some help.
I was having the same problem.
Then I remembered that it seemed to start around the same time as getting an error message re. Heidi driver so I checked 3DCONFIG, manual tune & found 'Enable hardware acceleration' was unticked.
Ticking it back on solved the problem for me, hope it does for others.