The only incorrect part was 'incredibly high'. This feature would indeed be causing a server load and sending data around non-stop, because people are logging in and out non-stop. Depending on the linkshell and friendlist size, you're looking at 64+100 messages per person (at max). Each of those 164 needs to looked up and checked for online status.
Those are not going to be 1-bit or byte messages, more like 100 bytes with headers and message content.
And no, that's not a lot, but with communications being limited by the PS2, every little byte adds up. For PC it's laughable, but with PS2 this needs carefull consideration.
When servers are brought down or up, or even just a provider deciding to block FFXI for w/e reason, this could cause a cascade of messages, crashing clients or even whole servers. Unlikely to see it actually happen, but it is something to consider with a feature like this running on ancient hardware like PS2. It's barely capable of keeping up with normal gameplay as it is...