I don't notice any lag with the rifle.  You mean people walking through your bullets?  You may need to increase the fire rate or the server tick rate.  I can't see how removing the flash would remove any lag but at the bottom of h4x_Rifle.uc there's variables bMuzzleFlashParticles=True etc...  Just remove that whole block with MuzzleFlash and it should get rid of the muzzle flash.  I can do that for you if you want.

I know that if the rifle has bullet momentum it can push you back and slow the fire rate down on you but when I look at the code the momentum is 0.