I use the Fast User Switching option in Windows XP Pro.
I have another user account set up specifically for this purpose, and it works great. I can be logged in with my main UO account on user account #1, and simply Switch Users to user account #2, start another instance of UO, and log into my second account. It's really simple and efficient when transferring items between accounts, co-ownering homes, resing pets, etc. I am especially fond of this method since it's legal, and requires no other software to be installed or running.
I only use the 2D client...waiting until SA to give the new client a serious try. I am assuming this would also work with KR, although it sounds like KR lets you run multiple instances anyway.
My system is a Dell running P4 3.00 Ghz Dual Core with 3.25 G of RAM.
I haven't had any performance issues, even after long gaming sessions without reboots to plug those pesky memory leaks.