If you're trying to ensure that you don't flood clients with data, then it would be sensible to perform some dynamic throttling. Start with an estimate of what you might consider appropriate. When you start dropping packets, halve the estimated bandwidth, otherwise increase slowly by some constant value.

(Thanks to hplus0603 for this recommendation in a previous discussion)

I would also recommend only modifying this value (reduction or growth) after it can be confirmed that data has been received from the client since the last change was made (as there might be n packets dropped before the client receives data at a reduced rate from the server due to the packet loss, so you would actually reduce the bandwidth by 2^n if you did not take this into account).

Turns out I can send and receive more than 30-40 packets a second. With my test I was sending all packets in an instant after a second had passed. I just have to come up with a solution to control when players in an interest group start sending their updates to each other within a period of a second.

Typically the packets wouldn't be sent all at once every second in a real world scenario. Send out your packets every 10 milliseconds or so.

Also remember that the internet is slower than your testing network, and routers typically start dropping IP packets when the buffer for an interface is too full (ie, too many packets too fast for the speed of the line).

Of course if you are really nerdy you could set up two cisco 2500 routers with a serial wan link and manually set the speed to whatever you like on that link and test it to real world 2001-ish internet scenarios.