Is there some reason you wouldn't use barnacle instead of tethering? I've used PDAnet and barnacle and don't really see a performance hit either way . . . .
Yes, if the kernel is the issue, then barnacle might be a good alternative. I haven't used it personally, so I can't speak to its performance, but it looks like it should work with a rooted droid without a custom kernel.
Now I would personally suggest using a custom ROM, ChevyNo1's simply stunning and Bugless Beast are my favorites. They include wifi tether kernels, and also allow for overclocking if you should be so inclined.
Doing it this way provides some confidence that whatever kernel your using is compatible with your ROM. Kernels can be very finicky on different Droid handsets, but when you get the ROM and kernel packaged together, chances are they will work well.
If you don't want to apply a custom rom, then you really just have to experiment with different kernels. Most current ones will support wifi tether. It's really just a process of elimination until you find one that works with your setup and is stable. In my experience, using a custom ROM simplifies this process.
I have a ton of experience with wifi tether (my droid was my main internet connection for a while), so if you're still experiencing issues, just let me know. I'm glad to help.