Will turning off htaccess have a noticable performance increase?

Solution 1:

Apache won't need to look for a .htaccess file every time it accesses a file. The actual performance benefit will depend on,

  1. traffic to your site
  2. site layout
  3. server profile

I suggest you baseline the existing performance, using a web stress tool such as Apache's ab, make the change, re-profile, and see how much impact it has.

As to your second question, yes, I believe you would move the .htaccess stuff into <Directory> sections in your <VirtualHost>.