Lag updates don't always require a "code" update that needs to be patched to the servers, for you to download on the client side. They also don't always need to include downtime. A lot of things can be tweaked "real time", especially on the virtualized servers.
Some fixes have to be performed by their peering providers, the internet providers that connect to the internet backbone from the data center the servers are in. This too can be done while the servers are running and doesn't need downtime.
On the back-end, a lot of the reshuffling of resources can be done without downtime, such as allocating more or less CPU time to virtualized servers, and depending on whether the hypervisor they use supports it, in some cases hot-swapping (adding/removing) memory can also be done on the fly with a simple flick of a switch.
This all said, I don't think the work to fix lag has stopped.... however, the communication from Turbine staff about it seems to have died completely.
Moved from Riddermark to Arkenstone on 9/29/2015!
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Disclaimer: The definition of "Soon™" and "In The Near Future™" is based solely on SSG's interpretation of the words, and all similarities with dictionary definitions of the word "Soon™", "Near", and "Future" are purely coincidental and should not be interpreted as a time frame that will come to pass within a reasonable amount of time.