A few seconds might be great for transfers, for trades however... just look at mtgox.
In Ripple I believe all orders are limit orders. But you do bring up a good question. Ripple can't support enormous trade volume with millisecond latency. Is this a problem? I don't know.
Also who is the one running the order book? The server?
There is no "server."
All validating nodes process the order book using a deterministic algorithm. Since they all have the same ledger and set of proposed transactions, the application of outstanding orders is deterministic. All nodes come to the same conclusion regarding orders, since they began with the same state and use the same rules.