Your comments

Yes, I had a look at it recently. Thanks for mentioning!
A customer reported that korean characters do not work either.
I see. This could be added (along with other commands like "convert to upper-/lowercase") to the context menu that pops up when you make a selection.
I have no explanation for the fact that it seemed to be more sluggish at first.

But it's good to hear that it's better now :)
Thanks a lot! Now I see where you're coming from. I'll add switches to the app settings because I think that most people don't want to have their source code auto-corrected.

Writing an ebook in html is a use case where this does make sense though. That also explains your feature request about html entities (http://feedback.textasticapp.com/feedback/9985-html-entities/) :)
What are you using Textastic for? For HTML or source code I don't want to have a spell checker or auto-capitalization. This only makes sense if you just enter normal text. Maybe I'm missing something?

I might add a switch to settings that would allow you to enable these features.
A movie would certainly help!
Well, this certainly doesn't sound like the sort of delay I see. I was talking about tenths of a second.

What kind of file (file size, file type) are you editing?