The Farlands makes the game lag? Really? I will have to see for myself.
This only happened in Beta versions and was due to buggy falling sand entities which were unable to fall (back then underground gravel deposits would automatically fall) and caused thousands of entities to pile up; when I modded 1.6.4 to have the Far Lands I had no issues at all aside from perhaps a temporary lag spike after teleporting (gravel still falls in this version but at least it falls properly), nor have I seen any differences in performance even out to 2+ billion blocks, except the game eventually crashes when you try to load chunks past the 32 bit integer limit:
Also, as I did in the first link you can use a tool or mod to move the Far Lands to near the origin so any remaining issues due to the distance aren't an issue (many of them have been fixed in newer versions; vanilla 1.6.4 still had various issues with blocks like redstone dust rendering weird, which I also fixed in TMCW, which ironically removed the Far Lands fix, but other changes I made pushed it far past the 30 million block limit; the only way to practically get that far out is to use an external tool as /tp still limits you to 30 million).