Well, the way I understand things is this :-
Freespace textures are dealt with mainly by software, the final computations are sent through a hardware system, i.e. HT&L, but most of the maths involved is figured out by the CPU. This is always how FS2 has worked. However
it is possible these days to get most of this computational work done by the hardware, leaving the CPU free to do other stuff. Bobboau has said saveral times he'd like to look into this, and I'm sure that once he gets the time and energy, this will be high on his 'to do list'.
The slowdowns may be partially because of some kind of bug, I'm assuming these slowdowns on FS2 standard models are reported on Mantis? But personally, I think it is also partly because we still have a software texture system that is trying to keep up with a hardware rendering system.
I personally run a GeForce 5600 256Mb, using the Lite version of the VP and I get a pretty smooth ride, there are still one or two hiccups in gameplay, but FS2 is heading for a major evolution as far as graphics handling etc is concerned, so I think the best we can do is report the bugs and be patient for just a little while longer
Or, I could be completely wrong, but what the hell, it's 5:30am