I think it's something else than a cpu bottleneck here, or some additional problem. With my old Core 2 Duo @3.2 Ghz, there was no lag on the 1st island, at least not with the latest dev builds at that time. A dual core i5 @2.5 Ghz should be faster than that.
How to make Wind Waker run fast:
1. Use HLE audio instead of LLE audio
2. Create a hotkey for efb to ram and efb to texture switching. Switch to efb to texture once after stating the game. (this will break the pictobox, but you can switch back for taking pictures)
3. Disable AA and set IR to 1x. Then slowly increase IR until the game lags, go back one step.
How to make Wind Waker run fast:
1. Use HLE audio instead of LLE audio
2. Create a hotkey for efb to ram and efb to texture switching. Switch to efb to texture once after stating the game. (this will break the pictobox, but you can switch back for taking pictures)
3. Disable AA and set IR to 1x. Then slowly increase IR until the game lags, go back one step.