"gpm" may be your solution. I have slackware 8, and it doesn't like my logitech ps2/usb wheelmouse. So what they do for you is give you the option to load up some program called gpm or something like that. It acts as a buffer between your mouse, and the rest of the system. Gpm has some coolness, in that it enables you to cut and paste on the text mode screens linux originally comes up in. Then they gave me the incantation to get Xfree86 to get mouse input from gpm instead of directly from the mouse. So it's a little kludged, ok, but you really can't tell there's any extra delay or other retardation.
Do you want me to go dig into my slackware setup to get you the specific program names, and invocations? (it's at home, and I'm at work right now.)