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The following code will let the workflow associated with the Incoming Email Enabled Library be started automatically when it is set to started when a new item is created.

$spWebService = [Microsoft.SharePoint.Administration.SPWebService]::ContentService
$spWebService.DeclarativeWorkflowAutoStartOnEmailEnabled= $true
$spWebService.Update()

My client is keen to know about any performance issues or limitations before setting it to TRUE.

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In addition to what hajamie outlines, I also had to go into Site Settings | Manage site features and enable Workflows can use app permissions, then do an iisreset to get a workflow to start automatically with an incoming email. Just a note in case you decide to proceed with setting this to true.

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I believe that the issue is with security, rather than performance. This KB article describes the setting.

This problem occurs because a security fix in Windows SharePoint Services 3.0 SP1 prevents declarative workflows from starting automatically under the system account. E-mail enabled list items are always created under the system account.

Also,

To prevent the declarative workflows from impersonating the system account, the workflows will now impersonate the user who created the workflow association

So I guess this could possibly allow users to impersonate other users in some circumstances.

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