Thanks Sid.. I had no idea about setting the transfer frequency. I will look into that tonight.
I have clients spawn enemies as a way to test the difference in behavior, and also to balance enemy count per player, but I certainly don't have to do it that way.
I might be missing some understanding of how ownership works, but it seems if I spawn by host, other players will always face the lag problems when fighting those enemies. I have seperate FSMs active depending on owned or not owned. The not owned FSM is designed to receive instructions, the owned sends.
The local hitbox thing might work if I can tighten up the location sync just a tad more. If you are in a slightly different location, the hit doesn't register. I don't mind if the hits are off for the other view.. as long as the player you control and the corresponding opponent feels responsive.