I've located the problem that occurs when a large number of users are on the system. Note that it is NOT due to shared hosting limitations, but do to a fundamental design of phpFreeChat.
When a user first logs into the channel, the browser issues a new request for EACH user that's on the system. That means if there are 100 users online, the next user that joins will have to issue OVER 100 REQUESTS to load all the data (via the "whois2" command).
This is very a disappointing design decision. This basically means that this system cannot be used on any site that may ever have more than 50 users on it. Your web host, even if it's a dedicated server, will go down. Not to mention that it's going to cause havoc on the poor users, too.
I'm examining ways to disable/work around it. But this is such disappointing find. Anybody else been looking into this?