Ideas as to why crypto chops off so much throughput in the first place
(from 120mbit to 80), and as to what else to poke into with crypto on,
would be nice.

Crypto as in WPA2?  If 1 client is fine, but multiple clients is not, my guess is that changing the AES key in the crypto accelerator is slow/difficult, and so what you're seeing is the lost time as it switches security contexts.