Hmm, you're right; it works just as well with half the particles at double the size! That's much better.
Is there an inbuilt reason that particles are more efficient than sprites to render? I've also been making a similar waterfall that's entirely event-based, using sprites.http://www.mediafire.com/?wu4j5dtttub
(Not a very efficient waterfall, but I do need objects to interact with the particles. I'm eventually planning to have a swarm of objects chased through it, encountering some resistance and pushing the blobs of water aside.)