It's not affecting the monsters, and it's more than just adding height.
It's a complete change of how the data is stored, which makes it more efficient and more flexible for mod authors.
It shouldn't take as long as it is, but I guess that's a combination of:
1a) Minecraft storing each region (512x512 block areas) in individual files;
1b) Us lot having explored and built things across relatively vast area;
1c) the server being Windows, which isn't great at handling large numbers of files;
2) Mojang not bothering to performance test the process on non-small worlds, and thus putting little/no effort into optimising the code once it was completed.
I was being a bit facetious there Pete. But yeah I agree it's probably #2 mostly. It's a fun game but I don't think I understand why it's written in Java.
And that's not really the problem - Java is perfectly capable of being fast enough.
Assuming the in-game converter uses the same code as the standalone tool, which I just had a quick look at, then the slowness probably comes from a bunch of debugging functions left turned on, (and using an exponentially slow method of concatenating strings for some of them).
No it's not! :@ If you hire a plumber to fix a leak and they end up flooding the room in the process, you don't say "oh that's ok, I couldn't do better".