Combat lag in City of Villains
Unfortunatly, I can't help you, but I can say that I have the exact same problem, but it's not resticted to Villains only. It happens on Heroes, too. It has been happening to me since shortly after the Winter Event started.
Attacks that miss don't give any lag. ALL attacks that hit, mine or someone elses, give me lag that leads to the game freezing. AoE attacks are the worst offenders in this case.
Recently, it got so bad for me, that cueing up attacks would freeze things up. I haven't been able to actually play the game since... Wednesday, I think is when I had to call it quits. Since then, I've been playing the market, or working on badges that don't require combat.

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Check out this thread, Common Solutions & Posting Guidelines
Then post the results of these two programs:
- CoH Helper - it will show us basic computer settings and your CoH configuration.
- HijackThis - it will show us what's running on your computer concurrently with CoH. Click on "Do a system Scan and save a logfile." It will automatically open up Notepad and put the info there. Make sure Wordwrap is off in Notepad (Format > Wordwrap unchecked) before you cut and paste here.
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Interesting bit of information here...
For Christamas, I got The Wife™ an internal card reader. Went to put it in her case, and found that her mobo didn't have a free USB connection thinger to hook it up to, and on top of that, the face for the case didn't have a removable part so that the card reader would be accessable.
So, we decided to put it into my PC, and replace my old one, since it can't read SDHC (or izzat HCSD?) cards. It didn't line up correctly to keep it from being pushed back into the case when I tried to use it.
While I was in there, I saw that, as usual, the guts of my compy were dusty. I used Q-Tips to clean off the fans, and since I had removed it to try to put in the new card reader, I also cleaned off my VidjaCard. Light layer of dust on the card, but lots on the card's fan.
Pop'd the card back in, rebooted, and the next time I logged in to the game, my combat lag was gone!
tl;dr version
You might need to clean up the inside of your case, including the fans, and your video card. It sure can't hurt.

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Biggest Troll on the forums? I'll give you a hint:

This makes sense, especially after the "hour of playing" and the fact that hits have to render FX on the target(s) as well as damage ticks and so forth. We could be looking at an overheating card.
Since Villains tends to be more 'crowded' object-wise (all the clutter in the zones, the semitransparent textures in the Arachnos maps) it makes sense that symptoms would appear here first.
Also check to see what else is running on your system - HijackThis is a good program to use. You don't need to change anything with it - just save the report and cut/paste it in a reply. We can then scan it and see if there's perhaps some things you don't use while gaming (or use at all) that can be shut down, disabled, or uninstalled.
"City of Heroes. April 27, 2004 - August 31, 2012. Obliterated not with a weapon of mass destruction, not by an all-powerful supervillain... but by a cold-hearted and cowardly corporate suck-up."
In CoV sometimes (usually after an hour of gameplay.) the combat starts to lag. In heroes, this doesn't happen to me, but in Villains it happens to me often. Every time I use an attack (For example Assasin strike) the game lags horribly for a few seconds, then it's normal again for a few seconds until I use another attack again. And the game crashes sometimes too during combat(Lost connection to mapserver). It stops for a while if I shut down my computer for a while, But it reappears again when I log in. I've tried to reduce the graphics to lowest in the Game options, but it doesnt help. It really makes the Villain Side for me unplayable. Can anyone help me please?