I was helping someone else with their project, and we were
getting up to over 40,000 textured, shadered,in-camera,
rotating, and visible entitys before things started getting doggy.
But we werent using any physics.

Unless your box-spawner has changed a-lot since I last saw it,
I think its lag is probably due to too many physics collisions
happening per second due to the huge number of overlapping blocks.

Once I get some free time in the next few days I'll take a look and see
if I cant squeeze any improvements out of it.