Here is my setup....
Basic MQ2 from MQ2emulator.net
WinEQ2 --- 2 seperate folders
Main folder -- for pally right now.. a bit higher view distance
2nd Folder - bare bone settings
I almost never ever get the "dance" from characters unless i just switched off that toon. Switching back to them fixes their /stick.. then switch back to main screen.
MQ2FPS settings have my fps on main at about 30~fps and all background instances of EQ at about 15-20~ fps.
the "dance" is due to an MQ2MoveUtils option. Make sure "WinEQ=on" is set to on as it defaults to off in the ini (i forget the command to do it in game, can edit the ini just as easily though). Turning this on instantly solved any sick problems that i had over the course of 3-4 weeks, it was a huge relief once i found that fix.
as far as loot lag is still concerned...ive never and i mean never experienced this loot lag at all and i just switched to UF 2 weeks ago. Since then ive farmed about 4-5 charms in LDON4 with no issues of lag at all. I've also never heard of eqplaynice and i dont have it in any of my mq2 folders, and im a pretty avid user of mq2, i have like 4 hotbars full of macros i use all the time.
have you tried on a fresh UF install with no saved ini's / whatever else loaded? if its still doing it then, id rule out mq2 being the culprit