I only kept the layer window open for a bit. It's gone now. I don't really like it. For now, I only keep the Properties and Command window open.
M-DUB, I found it necessary to run a Repair on MEP 2009 on a few machines from time to time experiencing the details of this sort of command lag.
I love the layer palette, but I'm on dual screen workstations. I run an extremely high resolution though around 1600x1200 on both screens.
I don't have any difficulty with the layer manager viewing as a flyout palette.
The Layer palette doesn't lag normal commands when docked and hidden with 780 layers in a drawing for me on a slower machine than yours.
I do have a 512 MB NVIDIA 7300 GT video card installed but its a bargain basement $50 gamers card. I'm only running 2 GB of ram.
I found turning off quik properties helps performance immensely as well as disabling any ribbon garbage.
The ribbon consumes 3 times the resources and does exactly the same thing a menu, palette, or toolbar can accomplish.
I have found that MEP 2009 ran with the acad.cui instead of the MEP.cui is much faster of course and is the only way the layer manager is available as a palette. But you lose the select similiar command on the right click menu. Also MEP 2009 seems to be more stable and perform better than MEP 2008 since the service pack. And finally, Reference Manager 2009 is hands down way better than 2008's.
Drawing TrueView 2009 is much more awesome as well. Both are improvements in stability and AEC library translations.