Sorry I'm late to the reply here, though everything Lin said would be right.
Glad Fraps works better in full screen, but is it still running at 1920x1200 when full screen?
HDD read/write speeds at high resolutions does put a huge strain, especially since you're trying to read/write from the same drive. Your long load times is due to Fraps writing +50 MB per second sequentially on the disk, but is interrupted by constant random seek to load RO.
The highest resolution I tried fraps'ing at is 1920x1080, so 1920x1200 is beyond me. One thing to note however, as I mentioned before, for the same aspect ratio, higher resolution does not mean you get to see more. It just means your CPU has more work to do displaying extra pixels to make up any object.
That, and RO is such a old game designed before powerful graphics cards, so it probably doesn't even use 10% of your HD Radeon 6970. The graphics in RO is mostly handled and computed by the CPU, not the GPU. This ultimately means that, even for an i7, 8 threads doesn't mean anything for RO. What you need is a single thread that can run at +4.0 GHz to crunch all those pixels to be displayed. The Fraps with CPU optimizations help a lot however, I do notice slightly better mouse input response time, but I can only imagine how much input lag you get at higher resolutions.
tl;dr
Lower your RO resolution. Not sure if your full screen is at 1920x1200 for you as well, but if it is and you get that huge improvement, may be due to Fraps' not fully supporting Windows 7 Service Pack 1 until 3.30 or later.
Example comparison between 1280x720 and 1920x1080 resolutions, as you can see only the interface menus are not resized, they take up a static amount of pixels at any resolution.
AnimusRO Client Resolution TestSo if you're planning on uploading to Youtube in its max (not best, 720p is best for now), 1920x1080 fits best.
Hope this explains something Neetox! As it's my last semester of Uni I won't have too much time to make videos but watching them while procastinating is always good ;>
Good luck with the video editing, I don't really use virtualDub so I couldn't help with that.