Shatt used to do that to me, though it died down a bit as people got bored.

I've never had lag in Dalaran (amazingly, since Shattrath was always horrible.. I think dividing the city between Horde and Alliance helps a lot). Maybe your video card sucks?

I doubt its my card, my old one fried 2 months ago and I put a new one in. I don't remember the specs, but it greatly improved my performance in OL. And everything works fine in HF, BT and DB.

But what is it about Dalaran (or Shattrath before it was abandoned) that causes lag issues in the first place?

I heard that it may be the high number of NPCs that are in Shattrah and Dalaran. I'm not sure how this compares to the number in other cities or how true it really is, but when complaining about it myself, that's what I was told.

I bought a good deal more RAM as i was running Vista and needed more then the basic requirements.

Running with 3GB now and i seem to be doing fine in any major city.

I think you'll find that's primarily a computer specs issue - and for more than just your graphics card. Memory, memory speed, hard drive speed, graphics card memory/speed...every single character within your view range has to be identified, if they're a PC all their GEAR identified, details (mainly visual, depending on mods) grabbed from hard drive, and loaded into RAM or maybe graphics card memory...

Think of all the gear slots that are displayed for every PC, and it scales up fast. Try reducing your viewing range (under Video, can never remember exactly which setting - there's 2-3 that sound similar, just mouse-over them to check which ones are the range to see terrain, and objects/people).

When you're out and about, there's not much more involved than your graphics card (yes, I'm over-simplifying - but for any decent system, that's mostly true). In a very crowded area, many other aspects of your computers performance steps in, and ANY bottleneck can slow things to a crawl.