I wouldn't be worried about the 79 ms latency so much as the 92% packet loss. Might as well be a big black hole for data. Then again, what do you have that would be sending 1700 byte IP packets? Most traffic starts out as LAN traffic, which means it will be 1500 bytes or smaller (unless you manually crank up your MTU, in which case you'll see the fragmentation you mentioned). Encapsulation, like PPTP, or LANE Emulation, will increase that size, but it shouldn't hit 1600 bytes, let alone 1700...
That being said, even the 7-17% packet loss at lower packet sizes shouldn't be happening, and could be causing significiant TCP retransmits, thereby causing the appearance of large latency. And UDP appplications will get crappy performance.
A cool tool you may want to look at is Matt's Traceroute (MTR), available for both Win32 and Unix/Linux... Starts out as a normal traceroute, then continues to ping each hop along the way, showing latency, packet loss percentages, etc. so you get more than just the 3 tries at each hop.
Thanks...I'm looking into it.