i think the optimization is not required on the PHP as much as its the XML that is being output to. i guess the other component here, is why did this start with Dolphin 7, this was not a problem on D6.1.6, so what exactly is the XML.php (multiple of them) actually for, and why could you not trim down the calls, most specifically on a site with only 18 members.

I am not clear on your explanation that PHP consumes as much resources as possible. I dont think this is factual, i can test this, and see more see, but what would make any other PHP script run and not spike the CPU resources? There is something wrong with this code, its not PHP, its not the lack of a php accelerator, its the programming that was done. there is a clear and evident problem.

then you go on to mention mysql cache. exactly what is that going to do for this specific resource usage problem? and where you have attempted to walk around the root of this problem, you mention the /flash/XML.php but what about the other FILE(S)
/modules/index.php
/member_menu_queries.php

why are these files also hogging the resources?