I would paste a print out but my system wont respond well enough when This occurs.
I opened Dolphin,
selected the network icon in the places side panel,
I added a network location for my ftp and named it,
the icon was created for the location within Dolphin.
I clicked the icon and browsed my files with ease WOOT! Much happiness ensued.
I closed Dolphin.
My system resources hit the top at 100% CPU usage and my whole system slowed to a crawl (of course).
I just managed to open a terminal.
After many minutes of waiting for it to come up, I ran top......minutes later,
sure enough kio-ftp had many running connections
and Dolphin was sitting there, quietly in the background, enjoying my CPU for dinner.
I attempted to kill the kio-ftp with no success.
I attempted to kill dolphin even though it shouldn't be running anyway.
It went away, as in it was no longer populating the top list.
After a few nail biting seconds the system returned to a normal state.
I rebooted the system,
I logged in and was able to get the same reaction again by opening the ftp location in Dolphin and then closing Dolphin.
I did this several times. I was able to reproduce same results every time.
I have no system errors with this and no crashes reported.
I am using the latest KDE-4 with all available updates from Synaptic.
2.6.33.6-pclos1.bfs #1 SMP PREEMPT Tue Jul 6 15:29:06 CDT 2010 i686 Intel(R) Xeon(TM) CPU 3.40GHz GNU/Linux
I do not use apt-get manually with this installation.
Would you prefer I report this to KDE folks instead of here?
Or, would you like a stab at it? mwuahahahaha.

Thanks for any assistance, I see by the list in the forums that your hands are quite full.
I greatly appreciate any time applied to this.
EDIT: This has been solved with a work around/configuration in Dolphin(
read all messages below). The solution is really not a solution. Dolphin does not handle information requests correctly when working within a local network. I have a possible reason I would like to suggest.
My guess is It attempts a "read ahead" on all the information, in every folder, of every item that is at the location your browsing and cache it. That could be an entire hard drive back up or an iso or a list of compressed items. This is because It tries to create thumbs of everything media. So instead of waiting for a request, it just goes on and on trying to read the information. The result is that when you close Dolphin it must complete the task at hand before it can stop running. Since a request for it to stop was made it gets pushed to the top of the list in importance and ends up being forced into a vicious loop by the system.
If the above is true, and I mean if, I don't think this could be fixed without a major rebuild.