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I am grasping at straws and this may not even be a correct theory... but, if no one else gets back to you, and you want to try something before you get the boot...
As a test. What happens to your server load if you turn off ALL (and for a good test it must be ALL) cacheing.
I am pretty sure Smarty lays dormant if cache-ing is turned off for everything. Pretty sure, not 100% sure.
If so, this would at least let you know if Smarty is impacting the server load for some reason.
Just a test... a random theory. Hope that helps, and leads to something.
Granted, this will mean more MySQL queries... but, perhaps that is preferable to the alternative. Again it is just a test. XOOPS is pretty efficient with its queries, anyways.
Also, have you alternated your persistent connection settings and your gzip compression settings? What are they set at now, just as a reference to others.
Finally, be sure to turn off any blocks that are always updating... like Site Info blocks that show the current number of users, who's online blocks, etc. I've seen some of those blocks bring sites to a crawl. Again, just as a test.