It's weird, I had this problem in the Might and Magic games and I couldn't get it fixed, yet the mouse works perfect in Realms of Arkania games.
Did you try different graphic settings with the "graphic mode setup" shortcut installed with the game? Might be work a try checking those ones.
You could try increasing the CPU cycles, it might make it faster. Although I don't think it'll work with this one in how they have it set up. Hit control+F12 a bunch of times to increase the CPU cycles, see if it has any affect(though doubt it will). Control+F11 will decrease the CPU cycles.
Did you try playing the game in a window to see if it fixed it? I think I remember it helping in other games.
You could also try increasing the mouse sensitivity in the config file in the game folder. Open the "doxboxrealms3.conf" file with Wordpad or something similar. The mouse sensitivity should be at the top in the file, increase the number to something higher.