Have you ever played MTA on this machine? If that was ok then LU should be too.
Single player lag can be a bit of a problem. In multiplayer this lag could clear up (Due to the game not having to process AI and stuff) but it could also get worse. If your game lags then you will lag remotely too (even with a very low ping)
I will see if i have a similar spec machine lying around somewhere (i think i have) to test on. Although, it has been tested on a 900MHz AMD Athlon, 256MB Ram, ATi Radeon 7000 graphics card and although it worked, text wasn't visible and graphics corruption appeared after playing for about 15mins so your machine may be worse.