Why have we not fixed it? Because it is not actually broken for most people. At the Open University, we have been running Moodle quizzes for more than 10 years, and in that time our students have probably made around five million quiz attempts, and this has just never been an issue.
In that time, the quiz code has been massively reworked, to make it much more flexible, reliable and performant, so actually, if this did now become important, it would be much, much easier to implement this now, than it was in Moodle 1.6 when we started.
In fact, there are two possible approaches to improving performance here. As well as your suggestion, of only starting questions when a user moves to a given page of the quiz, the other approach would be to create one quiz attempt for each student as a batch job, before they click the 'start attempt' button.
Similarly, you could make it so that when students click 'Submit all and finish', process_finish is not called immediately as a synchronous call, but instead is processed asynchronously. Those changes would smooth out the two biggest spikes in server load in relation to 'all students at the same time' quiz attempts, and they would be safer changes to make, because you don't change what any of the quiz processing code does, just what time it gets called.
So, anyway, I've thought about it, but it has never been important enough to get done.
Are you sure your server is tuned as well as it could be? It would be good to do some profiling (https://tjhunt.blogspot.co.uk/2013/05/performance-testing-moodle.html) to find what is taking all the time. If I had to guess, I would expect it to be all the database writes that need to be done, but you can never be sure. If that guess is correct. DB writes is something you may be able to tune for. Which DB engine are you using?
