The result was a game more sprawling and intricate than anything else that would be seen for decades. And it ran buttery smooth under MS-DOS in 8MB on a Gateway 2000 486DX2/50.
IIRC, the typical way to access high memory was through DPMI, a protected mode extension. The “unreal mode” used by Ultima VII offered the same flat memory access, but without the slight performance overhead of running the CPU in actual protected mode.
Considering that literally every other high-performance game of the era (e.g. Doom) used protected mode, I’m inclined to think U7 would have been just fine. Maybe the unreal mode made a slight difference on an older 386, but was it worth the configuration headache of having everyone edit their CONFIG.SYS? Probably not.