When I join a multiplayer server my fps starts off great, until a smoke is thrown. I can be aiming in one direction, notice my fps dropping from around 30 to maybe... 5-10? look in the other direction, low and behold, a smoke grenade...

i7 Q720 1.6, 8gb ram, win7 64bit, ATI mobility 5850.

Game runs well on low settings otherwise.

EDIT: All dust like particles cause major lag for my system. From car exhaust, explosion after effects, car dust trails, and most majorly smoke grenades. Please allow us to lower these particles more in the video options. I would prefer a large opaque blob over gameplay destroying fps lag.

I have this same issue with especially smoke. When you use for example a smoke grenade, fps drops quite a bit (like 5-15). It doesn't make a difference whether I look at the smoke or not. The fps stays low even after the smoke is gone! So basically when i'm like in the editor and use a smoke grenade, I have to restart the mission for the fps to get normal again. Might just be caused by the bad CPU utilization I don't know.

exactly, the game just needs to be optimized further. if the game still is this way in full game that would just be sad, but its just an alpha, so lets give them time to work this out

Agree, this is not optimized !
AMD 1090T, 6gb ram, win 8 64bits, ATI 6950

Unable to reproduce in the latest dev build. If this issue is still valid for you, please create a new ticket for it.