I believe that Graal's servers are hosted either in Dallas, or Paris... I can't remember which one of those cities it was though.
Other questions though would have to be asked to Stephane, since I am sure that no in game staff; or even PWA's know about Graal Online's financial situation.
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I think its stupid that no one can come up with answers, if anything, if the game experience was really smooth, surely it would attract more players, no?
Tell me if I am wrong!
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Rufus addressed this before, saying that Stefan didn't understand how poorly the game runs for players, and that Stefan has never been given any evidence to suggest that this is a widespread issue.
He doesn't work with Graal anymore though, so I don't know if there is much that can be done.
Here is the thread.
http://www.graalians.com/forums/showthread.php?t=20438