[username223]

> My first guess was that the tons of output take longer to get inserted into an Emacs buffer than they take to get inserted into the buffer of a good terminal-emulation application.

Correct.

> Can you give an example of a program that produces too much output for Emacs to keep up with?

Anything that produces a few hundred lines you didn't expect, e.g. a compile gone bad or an unexpectedly large diff. Unless you add something to "comint-preoutput-filter-functions" to discard output, you get to lean on C-c and wait for things to settle down.