I have to say the issue is not really graphics quality, it's loading of the sheer number of player models when you hit the Bank/AH area. I've entered IF from the tram a number of times very smoothly, but when I get near the AH (from any direction) and my comp starts pulling up data off the HDD for players, it lags hardcore. I know memory would help, but considering that 512 is the RECOMMENDED on the box, they need to work it so that those of us with 512 don't have a huge issue here.
Instanciating the Bank/AH would rock, but would require some redesign of the area, so I doubt they'd do anytime soon. Simply creating a "Trade District" like the tramway in it's own instance would be a great way to do this I think. Perhaps they could do this when they put in guild halls and player housing in the future. Each guild gets its own instance with a guild bank and faction AH, and your personal instance has your personal bank.
Hopefully moving AH's into the other cities will help this out, but I still have an icky load-lag when I hit SW. Give us back the "max number of player models" option, that helped me with this issue a TON in ST/OB... dunno why they removed it.