I already have a Zywall internet firewall/router box but for added protection I want to use iptables on the RH Linux 8.0 apache box that is servering web pages.

The problem I have is whenever iptables is turned on I get ping spikes. I have deleted all rules and even without any rules I still get these spikes. The spikes only occur when iptables is turned on and when pinging the box from a station. Pinging out from the box is fine without any spikes.

Pinging from the LAN the spikes are not to bad, about every 8-10 pings and it only goes up to 20ms. But if I ping in from the internet the spikes are between 200 to 800ms, instead of the steady 30ms-40ms with iptables turned off.

The PC is a Pentium 4, w/512mb memory with top showing very little resources being used.

Any one have any ideas on this one?

I don't know. I don't think it's a security issue.
What about traceroutes to the webserver and actual connections? Any weird latency problems there too?
Does your iptables script do more than just load rules? Like change /proc values?