I read somehwere (don't remember where) that the A1200 was pushed into mass production with a few manageable bugs still in the system, the most major one being a lot of CPU taxation on the internal IDE bus.
Non-DMA ide is like this, no way to get over it. This is not a bug, but a feature.
I was wondering if anyone knows if this issue was ever resolved
No it was never fixed.
With A600/A1200/A4000 IDE, all data goes thru 16-bit register. CPU need to push/pull each word one at a time. This is slow and CPU demanding.