Yes, its a compromise between how often should it trade and how big should be the effect of the the rebalancing (the profit after a consecutve buy and sell). I cannot mathematically prove it but my gut feeling tells me in a normally trading market the overall profit should be the same (half the distance leads to 1/4 the profit but 4 times more trades [and more mtgox fees, so it would actually be less profitable]).

Faster trades also means more problems when mtgox becomes slow (order lag) or disconnects often during fast price moves. You can experiment with smaller numbers by changing the value of DISTANCE, don't make it smaller than 1.2, at 1.2 you will pay 100% of your profits as mtgox fees, maybe 2 would be a good minimum DISTANCE to experiment with when the market is slow but I guarantee that as soon as there are sudden large price moves mtgox will start lagging at exactly the wrong times and it won't be able to cancel and place new orders fast enough.

This bot is not intended to make you rich quickly, you need to run it for months to see an effect. Write down the BTC price and your account balance once a day and plot the curves on top of each other after a few months. You could also program a simulation if you find historical price data to experiment with different distances, I haven't done this yet.