Explanation for Ridiculously Slow Copy Speed
OK - your iostat output is showing you that the disk2 spindle is the limiting factor. I would guess from the relative idleness of the other drives that you are copying from and to images stored on disk2. In that case, the head will seek back and forth and back and forth rather than filling up the drive buffer with lots of data.

Typical hard drives cannot perform more than several hundred IO per second due to physical limitations of the head moving along with rotational speed limitations (some time is lost waiting for the drive to spin so the area where the write will happen is under the write head.).

You could try making sure the data being written is going to a physical disk different than the one where it is being read and see a substantial speed up.

It might be faster to first copy the disk image to one of your other three drives, do the copy and then delete the source image from the "temporary" location.