Could you try moving the distributor over on to the SQL 2008 box. Replication got much better after SQL 2005. Looks like you are using anonymous subscriptions, do you not have VPN so that servers can see each other? I am not familiar with Internet based subscribers so probably not much help on its specifics.
I'd like to thank Hilary Cotter for providing the answer to my dilemma. His contribution to the SQL Server community is greatly appreciated!
To address the issue we needed to recreate the publication and specify the sp_addpublication argument @sync_method = 'native'.
According to SQL Server 2005, 2008 and 2008 R2 Books Online, the default @sync_method is character for snapshot publications (non-concurrent character mode BCP output) and concurrent_c (concurrent character mode BCP output) for all other publication types. However, in my experience, the actual defaults are native (non-concurrent native mode BCP output) for snapshot publications and concurrent (concurrent native mode BCP output) for all other publication types. This is actually a good thing as the native SQL BCP snapshot format is faster/more efficient to deliver to the subscriber. The character formats are only necessary for publications with non-SQL Server publishers.
Also from SQL Server Books Online: When applying a snapshot that was generated at the Publisher using the concurrent snapshot option, one thread is used, regardless of the number you specify for MaxBcpThreads.
The default in SQL Server 2000 was native and according to SQL Server 2012 Books Online, the default has been changed back to native for all SQL Server publications.
Now that I've recreated the publication using the argument @sync_method = 'native', I can now push multiple BCP files simultaneously to the subscriber, thus taking full advantage of the large pipe between our site and our customer's site.
I just finished blogging on this topic (with more detail) here: http://mattslocumsql.blogspot.com/2012/06/distribution-agent-for-transactional.html
Hilary Cotter's swift response was invaluable to solving my issue. Thank you again, sir!
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