I'm happy to hear you are enjoying the style of the game :)
About the lag, there aren't a lot of options to adjust the quality now but when you launch the game, you can choose between a couple of presets in that little window. I haven't tweaked the presets in a while so I can't vouch for the results.
Other than that, you may lower the resolution. With the dithering enabled, the quality difference shouldn't be noticeable.
I'll continue to find optimizations so keep an eye out for updates if you like :)