From the linked paper:

The generally accepted rule of thumb is that 1bps of network link requires 1Hz of CPU processing. Figures 11, 12 give a full story of this rule of thumb. (where Hz/bps ratio = %CPU utilization * processor speed / bandwidth). It had held up remarkably well over the years, albeit only for bulk data transfer at large sizes. For smaller transfers, we found the processing requirement to be 6-7 times as expected. Moreover, the figures show that network processing is not scaling with CPU speeds. The processing needs per byte increase when going from 800MHz to 2.4GHz. This happens because as CPU speed increases, the disparity between memory and I/O latencies versus CPU speeds intensifies.

Does anyone know if memory latency is still causing problems in common implementations (like linux and freebsd)? I would think that the parts that are the bottleneck could be re-written with that in mind and gain quite a bit from it.

TSO really turbocharged bulk TCP transfers, so now 2 GHz can drive 10 Gbps as long as you're sending >=64KB chunks. This has made performance brittle, because 10 Gbps of small packets requires 10x-100x as much CPU as 10 Gbps of bulk traffic. Also, receiving requires more cycles than transmitting.

Indeed, it's common to see DDoS protection offerings defined both in throughput (e.g. 50 Gb/s) and packets per second (e.g. 30 Mpps), which results in a bottleneck in packet size (e.g. ~200 bytes) at high throughput.

I'm very biased against “approximately X per Y” statements in general because just about any non-pathological curve has a linear tangent somewhere or the other, but if intervals wherein that proportional approximation can be said to hold are not stated it's pretty haphazard as a means of estimation.

Also, what kind of physical/logical process and attendant costs is it encoding? Does one per second of anything require one per second of something else? What if the processor were half- or double-the-bits?

Just now I was working on integrating and optimizing networking for some microcontroller-based software (using lwIP). At the end, I've reached 7MB/s send and 10MB/s bulk receive speed.

I just did the calculation. It says for 10MB/s I'd need 80MHz. The chip runs at 84MHz. So, it's pretty close :)

There's other things you can offload now as well. Search for info on DPDK, Intel QuickAssist, etc. These sorts of things will allow off the shelf hardware to displace expensive, proprietary ASIC accelerated routers, firewalls, etc.