My opinion...
I played fine when I had 56k and didnt know what lag was. I got really good at df2 when I was still on 56k. So when you say you cant improve, thats not true, some really really good players are on 56k. They would probably be a little better on cable, dsl etc. But then they would be alot easier to kill. Take skinbag for example. He is a great player. He would be better on cable, but he would also be easier to kill on cable.
Now for hardware. I used to play on a PII 450MHz. Didn't have any problems and ran the game fine till it got old. It started having problems running custom maps with a few more objects. Graphics lag is worce then lag in my view. I even had a GeForce2 MX/400 64MB Card. That didn't seem to help my gfx lag at all. I would recomend getting a new CPU and GFX card if you are getting lots of video lag.
But I do agree with sb alot on the moniter. I used to have a POS 15 inch 2. When I bought my new one my whole game improved alot. I could see better and things were alot clearer. I even found I liked dfhq better hehe. Flatscreens rock
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To sum it all up. 56k is fine to play with, you will probably do better on cable, but you will be killed alot more. Hardware and a nice moniter will improve your game alot. You dont really need a super system to play df. This game was made for 56kers and shitty computers. Just look at all the other games (SoFII For example). If you got anything higher then a 250 ping you are done for. And if you got a crapy computer your game will run like crap. But 56kers can be top players in DF and crappy computers seem to run this game just fine.