I have excluded /etc in the path before - the problem with that approach is that in cases where the /etc/crxde/profiles/default/libs path has been supplemented with additional JARs, CRXDE's UI is no longer able to compile classes using those JARs so even though SCM can compile them, CRXDE highlights what it believes are errors in the UI.
Unfortunately, in the CRXDE profile's path property, it appears impossible to include only subdirs of /etc/ without including the /etc root directory itself. But there's another way around this problem.
The simple solution is to hide these paths from CRXDE by creating a new account (perhaps called crxde), assign all permissions to it, refresh the permissions, then deselect all privileges on the folders that are causing CRXDE to slow down. In our case the culprit was /etc/tags since we store tens of thousands of tags in our JCR and use tagging extensively for linking content together.
