I don't know if it's related, but I noticed that in the latest DOSBox CVS and latest SDL 1.2 CVS, running with output=opengl results in 100% CPU usage even at 3000 cycles. When I try to type anything in DOSBox, it responds very slowly.
Edit: I think this may have been because of some driver options I had set - possibly forcing triple buffering in OpenGL.
Also, I get the ddraw hardware surface error even if I try to run in fullscreen, and I get it again every time I switch between full and windowed (or vice versa).
And since overlay is a joke in SDL (actually uses surface if you pick overlay), I'm basically stuck with surface as my only choice for output in DOSBox 🙁