Improving upon ArcGIS Buffer/Dissolve performance?

ArcGIS is utterly woeful for dissolving/merging. We had to do a buffer/merge for 3 million points recently and soon gave up on using ArcGIS -- their help desk didn't have much clue either. Postgres did it in less than an hour using the st_union function.

see http://blog.cleverelephant.ca/2009/01/must-faster-unions-in-postgis-14.html

I suspect Dissolve has difficulty intersecting all the circular arc segments that get created by the buffer operation. Therefore, try buffering with the dissolvetype = NONE, then run Densify to convert all the circular arcs to linear segments before running the Dissolve operation.

I'd be interested in seeing performance comparison of ArcGIS 10.0 for dissolving densified geometries vs. circular arc geometries.

I buffer and dissolve independently and the performace, whilst still woeful, is better than dissolving within the buffer