Yea, the event thing going yellow all the time is normal.
The CPU shouldn't go red on arm, though. The LQG needs to compute some gains, but it does that right after you plug the battery in, and takes maybe a second (i.e. long before you get the chance of arming). Computing-wise, LQG isn't that much heavier than PID.
Can you export and upload the UAVOs, so that I can inspect the configuration and SystemIdent object?