The slowness is attributed to the transparent PNG files used, and IE's poor support for transparent PNGs.

If you were to replace them with GIF's then you'd see the lag disappear.

This was VERY easy to do. I recommend that Chops makes the changes in the default worldofwarcraft.com template dropin package.

I did the following:

1) downloaded the worldofwarcraft.com template package to my computer
2) Noticed that only 3! files were of type PNG.
a)menubot.png
b)menumid.png
c)menutop.png
d)test.png
3) Used irfanview program to open PNG file, and save it as type JPG
4) Used SCITE text editor to edit layout.html file and changed all references of the above files from FILENAME.PNG to FILENAME.JPG
(I had to upload the modified files using the administrative uploader, and change my layout.html to reference the files from there , instead of the default location).
5) I changed my site to use the WorldofWarcraft.com drop in template
6) I then uploaded my modified layout.html file
7) Hit the "test it" button, and then the "go live" button.
8) Win!

I had this similar problem as well with my site and found that it was indeed IE7's ability to support transparent png, but maybe not the way you think. When I looked at menumid.png I noticed that it was only 1 pixel height. I saved this file, increased its height from 1 pixel to 20, saved it to my site and now my site loads just fine with IE7 and still retains the nice transparency.
http://www.esadguild.org

I've attached my menumid.png for your use.

Interesting... I will try this out.. Though, I wish someone who is better at HTML/CSS can try to get this template to work without using PNG's.... So all browsers could use it...

Maybe after I finish the config/documentation on my site, I might try and see why the gif equivalents dont work.