Yeah with DOS=HIGH,UMB and ditching smartdrv I was able to get it to 610k free. Not too shabby.
I played a bit with unthrottling it. The *best* I could get on my computer is 200%. Many times it would dip into the 60s. But yeah the driver/cpu/graphics prob need a bit of TLC in the optimization area. Been meaning to benchmark it using visual studio and find the hotspots. Just have not got around to it. Though the other guys here probably would have a much better insight into what needs to be done.
Another interesting x86 emu you may want to look at is bochs. http://bochs.sourceforge.net/ Now that MAME is GPL/BSD it may be worth looking at if there is anything in there worth merging. But being diff architectures it may be a dead end. It does have one of the more interesting x86 decoders I have seen using a variation of duffs device.