LW certainly can be. It's not so much LW as Java being not very memory efficient.

Some hints to reduce memory: Set your downlds for auto-clear. Get rid of search results that are a few hours old. Don't resume many files using the resume button (at least not many simultaneously.) Close any window you'e not using at that time (eg: Connections, Monitor, & Library windows) by using the View>Show/Hide. Reduce uploads to about 70 or 80%. Disabling Ultrapeer capabilities under Options>Speed will help. Keep LW hidden/minimised when you're not in front of computer. Let LW settle before using after opening. Don't use LW's media player whilst it's very busy. Perhaps use your default player instead.

* By the way, which port did you use to get LW to successfully to connect? This might help other people. It sounds like your isp has started to block ports generally used for p2p. They might have only applied it after they detected you were using p2p. ISP's can be very sneaky b/c they'll never tell you they've done this.