IMHO Minecraft as a game should be playable on an i486, it is just horribly unoptimized. An average Minecraft map is 128x128x128 that is 2MB uncompressed, I think Duke Nukem had bigger map sizes.
And then keep in RAM terrain within 10 'chunks' of the player (I don't know if that's circular, rectangular, or whatever)
By "work on performance and stuff" how exactly is it performing now? Playable, or just completely lagfest-like?