Whether or not a PC can run Mach3 at higher kernel speeds is reall a matter of trial and error when using slower (~1Ghz) PC's.
The demo version should not be able to run faster than 25Khz. Are you sure that it really is?
And lastly, Art has said that you should always run at the slowest speed that works for you. INcreasing the speed to 35Khz, if you only need 25Khz, offers no performance benefit, but puts much more load on the PC, which could make it less stable.