Does it lag when people transform? No. This is the exact same thing. If it lags when people transform, or you get huge fps drops, there is something wrong with your connection/machine, not the game.
And for future reference, here is the definition and difference between LAG and FPS LOSS.
LAG: More accurately known as PACKET LOSS. Basically, when you are playing, the server is sending you little packets of information, a lot like text files, updating things for you(like if a player is moving, how far away that spirit bomb is, who is charging a kame, ets.) You are also sending the server packets of info, detailing what you are doing. When it LAGS, it means that either the server or your computer is not recieveing data packets. When your computer is losing packets, the game will freeze, displaying the update the last packet had. When you stop lagging, players will appear to warp becuase the update you just recieved is drastically different than the one you had before you started lagging. When the server is losing packets, you will be able to play the game as normal, but everyone else will appear frozen. THAT is lag.
FPS LOSS: This has nothing, I repeat NOTHING to do with LAG. FPS LOSS is caused by your computer not having enough processor power, vid card power, or volume of RAM to handle what is going on in the game. If someone makes a Goku model with 2 million polygons, you game will become choppy because the model is too detailed, not because your internet connection is having fits.
Summary: LAG = connection problems
FPS DROPS= computer problems
Some of you may be wondering; if ESF requires all those packets(updates), how can the game possibly play so smoothly? Well there are 2 reasons, and we are going to learn another term.
1) PING: Im sure everyone is familiar with this word, but if you are not, next time you are playing ESF, hold tab and look at the last collumn on the right. It should be labelled PING. The number under that collumn in the row of your name is your PING. PING is how many millionths, that right MILLIONTHS, of a second it takes for your computer to send a packet to the server, then for the server to send a packet back to your computer. Think about that, MILLIONTHS of a second.
2) Now no matter how low your PING is, you will always have packet loss. Sometimes the packet just doesn't get to your computer, or to the server, or both. This used to cause skips in gameplay, but Valve implemented a packet loss compensation system in Half-Life. If I understand correctly(please correct me if I am wrong), if it detects that there has been a packet loss, it will look at the last 2 packets and create another packet out of the average of those 2. Complicated to write, but once you understand it will be simple.
Any questions or corrections?