Are you actually using an old school "Hub" (probably haven't been made since 2000), not a more modern "Switch"? If so, that's likely your problem - you're getting collision storms and you need to swap out your networking gear to get an actual switch instead of that hub.
Hubs don't actually separate your network traffic - they just connect every PC together on the same network segment. This can become a problem because the way standard Ethernet traffic works is that if 2 PC's on the same segment try to communicate at the same time, they'll over-write each other and neither message will get through. So the clients will wait a random amount of time and try to send their data again, and if they collide again, they'll wait some more and try again - rinse and repeat until the packet times out. A "Collision Storm" is where you have multiple PC's all trying to talk at the same time and that essentially plugs up the line and no-one can talk. Watching that happen from a PC would look exactly as you describe - at 1st it may seem OK, then latency will increase slowly at first, then snowballing to the point where nothing gets through. In this situation the overall bandwidth being successfully used is quite small, but the latency can be extreme.
I know I even use the terms hub and switch interchangably myself sometimes even though I know the difference. Your situation used to be a common problem back when people used hubs - especially on small networks, but starting in the 90's switches became just as cheap as hubs so everyone switched (no pun intended) to using switches instead.
Multiboxing is probably the perfect storm (OK that pun was somewhat intended) in terms of causing collision storms. You have multiple clients all trying to communicate at the exact same time - every time you hit a button. By dumb luck, you'll likely cause multiple collisions every time you do anything in game - because its all trying to happen at the exact same time.
At least the fix is cheap - just replace your old hub with a cheap switch. Switches look almost exactly the same as switches, but the internal wiring is much different - instead of connecting every device together on the same network segment, a switch actually makes a separate network segment for each connection.
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