I have the same problem on Hardy Alpha 3 and Alpha 4 (can't remember
earlier). This doesn't happen in Feisty and Gutsy.

However, I installed 64-bit Debian Sid and there is no slowdown at all.
I even get 54Mbps instead of typical 11Mbps (!) over WPA-protected
access point.

I have built rt2500-source twice:
* 1:1.1.0-b4-3 for 2.6.21-2-amd64 kernel
* 1:1.1.0-b4+cvs20070924-3 for 2.6.24-1-amd64 kernel

Details follow:

# uname -smvro
Linux 2.6.24-1-amd64 #1 SMP Mon Feb 11 16:01:54 UTC 2008 x86_64 GNU/Linux

# COLUMNS=160 dpkg -l rt2500*
Desired=Unknown/Install/Remove/Purge/Hold
| Status=Not/Installed/Config-files/Unpacked/Failed-config/Half-installed
|/ Err?=(none)/Hold/Reinst-required/X=both-problems (Status,Err: uppercase=bad)
||/ Name                               Version                            
Description
+++-==================================-==================================-====================================================================================
un  rt2500                             <none>                             (no 
description available)
un  rt2500-2.6.18-4-amd64              <none>                             (no 
description available)
un  rt2500-2.6.21-2-amd64              <none>                             (no 
description available)
un  rt2500-2.6.24-1-amd64              <none>                             (no 
description available)
pn  rt2500-modules-2.6.18-4-amd64      <none>                             (no 
description available)
ii  rt2500-modules-2.6.21-2-amd64      1:1.1.0-b4-3+2.6.21-5              
RT2500 wireless network drivers
ii  rt2500-modules-2.6.24-1-amd64      1:1.1.0-b4+cvs20070924-3+2.6.24-4  
rt2500 wireless network driver
ii  rt2500-source                      1:1.1.0-b4+cvs20070924-3           
source for rt2500 wireless network driver

# iwconfig eth2
eth2      RT2500 Wireless  ESSID:"my-essid"  
          Mode:Managed  Frequency=2.437 GHz  Access Point: 00:11:95:7E:00:86   
          Bit Rate=54 Mb/s   Tx-Power:-3 dBm   
          RTS thr:off   Fragment thr:off
          Encryption key:3B5D-3C7D-207E-37DC-EEED-D301-E4   Security mode:open
          Link Quality=84/100  Signal level:-51 dBm  Noise level:-80 dBm
          Rx invalid nwid:0  Rx invalid crypt:0  Rx invalid frag:0
          Tx excessive retries:0  Invalid misc:0   Missed beacon:0

-- 
[Hardy alpha 4] Wrong bandwidth with rt2400/rt2500
https://bugs.launchpad.net/bugs/190515
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