Minecraft Version: 1.2.3
Bukkit Version: 1.2.3-R0.1
PreciousStones Version: 8.3.1 for CB 1.2.3-R0.1
Java Version: 1.6.0_31

on Intel Pentium 2.4GB Quad Core, 6GB RAM, GeForce 9600GT (1680 x 1050 @ 60Hz) with 64bit Win7

What steps will reproduce the problem?

1. See this video: http://youtu.be/4LfN0B_6kdQ

What is the expected output? What do you see instead?
Visualization glass to appear and disappear on movement.
Glass starts to appear then seemingly stops, screen blank/only sky, then black screens.

Do you have an error log of what happened?
Does not produce any errors in the server log.

Please provide any additional information below.
Have tried the command in creative mode and survival mode, with different texture packs including the default, in windowed mode and fullscreen - no difference.
The only client side mods I have installed are ModLoader (1.2.3), Sound Mod Enabler v2.3, Improved Chat and HD Textures, HD Font, Better Grass, Random Mobs, Custom Colours installed with MCPatcher 2.3.4_01

Sorry, forgot to list what other plugins are on the server:
Appleseed.0.7.1.jar
ChestBank.jar
ComPassionate.2.5.2.jar
Craftipedia.3.6.jar
DeathTpPlus.3.9.2.1986.jar
DisposalChest.1.7.jar
KeepItems.0.2.jar
Mobs.1.9.8.b7.jar
MyHome.2.2.jar
PreciousStones.8.3.1.jar
RealPlugin.1.10.jar
RealTeleporter.1.0.jar
TorchArrow.0.9.jar
TreeAssist.3.5.jar
WallClock0.2.2.jar
WormholeXTreme.1.016.jar

Just tried running the server with only PreciousStones installed - problem still occurs and there is nothing of note in the server log:

2012-03-10 15:02:06 [INFO] Starting minecraft server version 1.2.3 2012-03-10 15:02:06 [INFO] Loading properties 2012-03-10 15:02:06 [INFO] Starting Minecraft server on *:25565 2012-03-10 15:02:06 [WARNING] **** SERVER IS RUNNING IN OFFLINE/INSECURE MODE! 2012-03-10 15:02:06 [WARNING] The server will make no attempt to authenticate usernames. Beware. 2012-03-10 15:02:06 [WARNING] While this makes the game possible to play without internet access, it also opens up the ability for hackers to connect with any username they choose. 2012-03-10 15:02:06 [WARNING] To change this, set "online-mode" to "true" in the server.properties file. 2012-03-10 15:02:06 [INFO] This server is running CraftBukkit version git-Bukkit-1.1-R6-33-gb66156b-b2034jnks (MC: 1.2.3) (Implementing API version 1.2.3-R0.1) 2012-03-10 15:02:07 [INFO] [PreciousStones] Loading PreciousStones v8.3.1 2012-03-10 15:02:07 [INFO] Preparing level "Rimkibedia" 2012-03-10 15:02:07 [INFO] Default game type: 0 2012-03-10 15:02:07 [INFO] Preparing start region for level 0 (Seed: -4632077696100721298) 2012-03-10 15:02:08 [INFO] Preparing start region for level 1 (Seed: -4632077696100721298) 2012-03-10 15:02:08 [INFO] Preparing spawn area: 16% 2012-03-10 15:02:08 [INFO] Preparing start region for level 2 (Seed: -4632077696100721298) 2012-03-10 15:02:09 [INFO] [PreciousStones] Enabling PreciousStones v8.3.1 2012-03-10 15:02:09 [INFO] [PreciousStones] Version 8.3.1 loaded 2012-03-10 15:02:09 [INFO] [PreciousStones] SQLite Connection successful 2012-03-10 15:02:09 [INFO] [PreciousStones] (Rimkibedia) cuboids: 1 2012-03-10 15:02:09 [INFO] Server permissions file permissions.yml is empty, ignoring it 2012-03-10 15:02:09 [INFO] Done (2.741s)! For help, type "help" or "?" 2012-03-10 15:02:26 [INFO] ThornedRose [/10.1.1.6:55174] logged in with entity id 258 at ([Rimkibedia] -394.3125, 69.0, 214.625) 2012-03-10 15:03:07 [INFO] Connection reset 2012-03-10 15:03:07 [INFO] ThornedRose lost connection: disconnect.endOfStream

Tweak the visualization settings in the config. If your machine still can't handle all the block sends to the client then disable the permission.