Is the WAR endgame technically possible?

I was reading an interesting article on Keen & Graev's blog about a WAR fortress siege that was extremely laggy and ended up crashing the server when over 200 people turned up. MMORPGs in general get laggy and prone to crashes when there are too many players in the same zone. The WoW world event of opening of the Ahn'qiraij gates was a horrible lagfest, and even nowadays I have significantly more lag in overpopulated places like Dalaran. But generally WoW does a good job of dispersing people, by sending them off in various directions with quests. And especially if you consider the WoW endgame, people will be in groups of 10 or 25 people in a raid instance, a sufficiently small number to not cause big lag problems on half-decent computers. The endgame of WAR on the other hand is about capturing fortresses and cities, with no limit to participation. The more people reach the level cap in WAR (which appears to be a relatively slow process), the more likely it becomes that hundreds of them will turn up for a battle. These large-scale battles are the USP, the unique selling point of WAR. But are they actually technically possible?

The problem appears to be the amount of data your computer needs to process when there are hundreds of people around you. The problem is worse in a MMORPG than in other multiplayer games, because in a MMORPG every player looks different, with the avatar you are seeing on your screen representing his race, class, and equipment. So I was wondering whether to reduce the lag it would be possible to switch to a display mode where you see everyone with much simplified avatars. Like one avatar for every class/race combo, with no display of what color of armor he is wearing or whether he wields an axe or a sword. It's not as if you'd care whether you are being hit by a sword or axe. Yes, if you were fighting several Ironbreakers they'd all look like clones, the only difference between would be the name floating over their heads. But if that reduced lag considerably, and made crash-free fortress battles possible, wouldn't that be a price worth paying?

I remember Final Fantasy XI where the lag problem was solved by simply *not* displaying everyone immediately. You'd walk onto a crowded space in front of the auction house and at first see nobody, until they one after the other popped into view. Obviously that isn't a feasible solution for a PvP game. So if you need to see every other player, friend or foe, in your vicinity, the only technical solution I see is to reduce the amount of data necessary per player. I remember having seen a cartoon once, but can't find it any more, from somebody who buys a new first-person shooter game, swoons for 5 minutes about the spectacular graphics and effects, and then turns the resolution to minimum and all effects off to be able to actually be fast enough to win. Couldn't WAR introduce a simple toggle switch which you use when you start to experience lag and which reduces graphics to an ugly minimum, but allows you to continue playing without (or with less) lag? Pretty is good, playable is better.