Game has two settings for it - low and high, there's no problems with low, but with high enabled framerate drops to around 1\3 of what it was before. I tinkered with all kind of settings in dgvoodoo, but didn't get much improvement. What did help was trying it wigh dxvk, while using it there wasn't much slowdown to begin with, and after some research I found out about an original dx8 dxvk fork called d8vk which has setting d3d8.managedBufferPlacement and setting it to false I think got me even bigger performance boost. Just wanted to share all my findings, maybe some of that would help.
Also, I think I probably encountered same type of slowdowns caused by alpha blending in other games too, in Vampire: The Masquerade - Redemption some spell effects definitely dropped my fps to unreasonably low numbers, cant't compare it to dxvk though cause it's dx7.