Note: This article pertains to ArcGIS versions 9.x. Later versions of ArcGIS may contain different functionality, as well as different names and locations for menus, commands and geoprocessing tools.
The decline in the performance, in ArcGIS 9.2 and later, is due to the time it takes the tool to accurately calculate the statistics for floating point grids. ArcGIS 9.2 calculates statistics using full resolution. This is an improvement from methods used in ArcGIS 9.1, where the Mosaic To New Raster tool estimates the statistics for a re-sampled layer.
In ArcGIS 9.3, the recommended workflow for mosaicking raster data is to use the Raster Catalog To Raster Dataset tool. The workflow creates an un-managed raster catalog, and then runs the Raster Catalog to Raster Dataset tool. This is the fastest mosaicking workflow when mosaicking rasters to file format.