It's not the PS3 it's a combination of two things. First is graphics culling aka draw order aka draw the monster first so we can see it, we don't care about the other players as long as each of us can see the thing we are hitting. second is server overload/lag. There are too freaking many players in the FATE for the server to handle. FATE happen in open areas within an zone which is itself a large single instance containing many, many players. If the zone is heavily loaded you can experience lag at any time. now, let's say a big FATE, one of the really popular ones occurs and you have 100+ players all rushing to join it. With 100+ players (or 50 or whatever large number you choose) all hammering their controls to fight a hectic FATE, the server cannot keep up. The more players, the worse this gets, and the more heavily loaded a zone, the worse it gets. You'll have seen situations where your character will freeze in position and move around like a cardboard cut out. That's because the server is no longer sending much data back to the client and it is only updating your position based on what you are doing locally.

Does the PS3 have some restrictions because of it's own performance bottlenecks? Sure, but oddly enough the graphics engine on the PS3 enforces fairly strict culling already to maintain framerate. That should mean that the performance on the PS3 is more consistent because it already limits how many active characters/enemies you can have onscreen at once in order to maintain framerate.

Personally I think that the overload on the server side is a more significant factor in this issue. I'm certain that the PC graphics engine also has some automatic limiters within it to preserve framerate at the expense of the number of drawn players and enemies. Not to mention the fact that if you talk to PC players with high performance rigs, they are not exactly ecstatic with these FATE either.

Maybe FATE should somehow be instanced to prevent a busy zone from crippling playability in a busy FATE?