AVS isn't slow at all!
 

It appears the main bottleneck in AVS's performance is actually the windows drawing routines! You can test this for yourself, place a window over the AVS window, so it's no longer updating the screen (but still getting processed). You'll get a FPS increase.

Blank Preset: AVS Window visible ~145fps (peak 160fps) @ 320x240
Blank Preset: AVS Window hidden ~480fps (peak 500fps) @ 320x240

Yes, this is a bad example, so I'll do another:

ZAP4 - Into the night: AVS Window visible ~18fps (peak 19fps) @ 320x240
ZAP4 - Into the night: AVS Window hidden ~20fps (peak 21fps) @ 320x240

ZAP3 - Fireworks: AVS Window visible ~34fps (peak 19fps) @ 320x240
ZAP3 - Fireworks: AVS Window hidden ~40fps (peak 40fps) @ 320x240

Still not convinced?

J6 - Glass Cube (weeee remix): AVS Window visible ~60fps (peak 61fps) @ 320x240
J6 - Glass Cube (weeee remix): AVS Window hidden ~85fps (peak 88fps) @ 320x240

This means that perhaps AVS needs to use a better screen display method than what it currently uses. Most of these show the average draw time of 4ms, is this a bit slow in todays hardware accelerated era?

This is quite logical... explanation:

AVS does all processing on the CPU, so the AVS image is kept in system memory. This is because video memory is only fast to the video card, but ultra-slow to everything else.
So when the image has been prepared it has to be sent to the videocard which takes up some resources.

Note that there might also be some side-effects on Winamp's FPS counter because it is hidden.. i.e. it might not be exact.