as I remeber, Palmbay is not optimized, there are no lod models, and a lot of other stuff undone, it could run much faster if the level would have been designed better.
maybe changing preload_mode to 7 also could help as it preloads models (in the other case they are loaded when first appear).
also, if there would be lod models, lod distances could be set to smaller that also make everything faster. there are a lot of options for optimization.
fps can drop in any game if camera is rotated towards a more densely populated area.