Its definately not a hardware issue. I am running a 2.3 GigaHertz QuadCore, with 24 GBs of RAM on a 64bit machine.
Although I have been successful in processing multiple states, and moving to an SDE environment, I am still having some rendering issues. For instance, everytime I selct the raster it wants to generate a pyramid, which is fine, but this process is only needed once.
I know I could resample the data, or simply change the 10 meter decimals into integers, but I want to retain the integrity of the data. The pyramids should help, but they are not.