I am seeing some real performance problems when using dump to dump to the local 
host.

The way this can be reproduced. In this example the system name is "it"

on system "it" as root

dump 0f it:/dev/nst0 /disk2

These backup takes almost 28 hours for 4G's of data.  During a dump it list the 
transfer rate as 38kb.  This even happens when I backup to a file instead of 
the tape drive.

Seeing that the dump should be using the loopback device for this I expect very 
fast results.  

I know the workaround in this example is to use "dump 0f /dev/nst0 /disk2" but 
fundamentally something is wrong that should be fixed.  This might not be a 
dump issue but a networking "lo" issue.