I have not noticed any system slow down due to the Grade Me block.
As far as the scoring goes, I played with this a bunch over the past few days and have discovered that the Grade Me block for Moodle 2.7 has a bug. It calculates a rownum variable for each student listed in the grade me block but when you go to actually grade a student, that calculated rownum does not match up with the correct student in the normal grade view, so the grade gets posted TO THE WRONG STUDENT.
I created a tracker item for this just last night. CONTRIB-5417