Well I had a 307K hosts file, which was the MVPS one plus a couple of dozen other domains I came across. Just for fun I exported Kaspersky's banner blocker list for safe keeping, then appended it with the 307K list and deleted all the hosts file (leaving the default two lines).
Browsing is much, much faster. Strange that when I first created the hosts list browsing was a little delayed (about a half-second more per page, but after a while it became faster. Then when I did a CCleaner cleanup, it got slow again.
Almost as if the hosts file was cached via SuperFetch or something. So browsing is super-fast and the banner blocker is working fine. I suppose the banner blocker is designed to work in a responsive manner, while the hosts file is less so.
Handy link btw: