I don't know whether this information is not posted elsewhere, but to be clear: AA is not supported in D2. Even if you force it, you'll notice that the lines are still jagged.
Forcing AA only forces the screenbuffer to have AA and not the internal buffers. If it would be able to do that, you'd see a lot of artifacts.
Forcing AA does make your screenbuffer many times as big (depending on your setting) which consumes a lot of the memory on your graphics card, which explains the decrease in framerate.
