Are there any hacks for iTunes which make it less laggy? Something which replaces the UI with a more windows like one or something?
On my laptop (1.6 Ghz/1GB RAM) it's completely unusable.
10 Tips To Make iTunes for Windows Run Faster http://www.howtogeek.com/howto/23480/10-tips-to-make-itunes-for-windows-run-faster/
The specs you provided sound a bit low. Have you tried shutting down all other apps to see if iTunes works at all on your machine?
The automatic analysis of all your mp3s for gapless playback and the search for covers may burn resources. Have a look at the status area and check if any of these one-shot background processes are running.
Here's a screenshot of the status area when iTunes is analyzing your music: