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Second, there are two limitations I have found. The first is that, like all javascripts, it slows down the load of the main page into which the dynamic content is to be loaded.
This is inevitable, as what you're doing is basically requesting the pages to be embed first from the client side to the server side, then served back to the client. If all you're doing is embedding external pages to the current as soon as the page loads (instead of dynamically based on user action), then Ajax isn't the best way to go about it, but rather something like SSI (server side includes) or PHP (include()). But I have to assume your pages don't support neither, so you're looking for a client side script for the task.
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The second limitation is that I cannot call htm files that have their own javascripts inside them. I know that js scripts should be loaded separately, but this particular script (as is the case with all Dynamic Drive scripts) is just open code, not a js file that can be called.
Well, any DHTML script theoritcally can be put inside a external .js file and work as if it's inline on the page. There are certain scripts that modify the page in a way that's not operable if contained inside a DIV, but for the most part, it should work. What's the script you're trying to call?