I was to migrate 100K+ users into OACS/.LRN (Oracle) and I noticed the very same when I migrated users into dotlrn based on MIT's/Tilmann's scripts. I haven't seen such a huge degration in performance, though. When I started the migration process, it would create about 5 users per second which subsequently dropped down to about 1.5 users towards the end.
I have traced the problem a bit but not too much since in the end it was still ok for us. The thing is that a new portal is created for every new dotlrn user and all dotlrn packages add a portlet to the new user's workspace. So the more dotlrn packages you have installed, the longer it takes to create a new user.
The first step for us was to limit the users who would become dotlrn users since only about 20,000 users needed a personal workspace. This helped tremendously since adding a new user to OACS is much faster than adding a user to dotlrn.
