First, thank you for the help. I did some more testing based on some of what you suggested, and started with SQL profiler and performance monitor. Based on the SQL profiler and the performance monitor SQL appears to be returning the shape for the entire US within 800-1000ms and watching the network the data all appears to be transferred within about a second, then the CPU on the AGS machine chunks away for 4-10 more seconds.
So based on that, it seems like it may not be a SQL issue because SQL is getting the data to AGS within 2 seconds, AGS is then taking an extra 4-10 seconds once it gets the data to render. When it pulls the data from the network share data transfer happens slightly faster as expected, and rendering barely puts a blip on the CPU monitor.
This leads me to believe that I should be focusing on the AGS server, or there is some sort of additional overhead for AGS to process the SQL data since the same exact dataset renders so much faster out of FGDB than SDE once it gets the data. If it makes any difference, SDE is using SQL geometry for the shape.
Thanks,
Josh