I belive that encounters should be more spaced out while traversing the Underdark. Granted I do accept that there are many threats in the Underdark. Though I am not inclined to belive they would be that close to one another without some confrontation or within a couple yards of each other.

So please space them out and make them a bit less dense, simply for realisticness' sake.

Some creatures fight one another already, but not really all of them simply because it creates lag, and furthermore I don't really think they're all that dense.. It's pretty random, in other words, I have often times managed to get to Fort Mur without seeing a single "red" flagged creature. As for realism.. in the "real" Underdark (yes, sorry, a bit of sarcasm here) your level 2-10 character should be dead after a few single steps by the hands of a variety of creatures.

Actually NPCs slugging it out in different factions (providing those factions arent the Large ones like Hostile) should cause less lag than PCs fighting them but I digress.

Two NPCs standing peacefully next to each other still cause less lag than them engaging in a fight.. When I sneak through some areas I seem to trigger the creatures to fight and since they do not spot me, they leave me alone, and still I often feel the lag kicking up slightly. Not much, but.. imagining they would all constantly fight each other it might add up.