Okay, heard back on the HTML/TEXT test. He says:
Aha - I had HTML set in my preferences (which is nice if you want to include code snippets) a setting.
The slowdown occurred when about 300 words are indicated at the bottom right edge of the edit window.
Now I have switched to TEXT mode and typed a lot of nonsense - as usual.
Now this effect seems to be gone. I also notice that TEXT mode does not list the number of words typed.
So I guess that the editor reads through the whole text each time a character is typed to find word breaks/spaces and counts the words.
This would explain the slowdown, which however seems to exponential than linear but may depend on the algorithm they use for searching spaces.
So, it looks like it's a combination of having your edit mode set to HTML and using a particular version of Internet Explorer (most likely).