If my .NET client uses System.IO.File.Copy to copy a file from \\server1\\share1\\file1.txt to \\sever1\\share2\\file2.txt
Yes it does. I can say this from personal experience with copying 10 GB Zip files between machines. The "client" machine was on a different coast of America than the two other machines. Between the two machines directly from one of them took a reasonable amount of time. Trying to initiate the copy from the machine on the other coast took ~10 hours :(