I've noticed that iftop usually displays an almost ten times higher speed than what ktorrent seems to be getting, to/from peers. Why is this? Is it the overhead in the protocol, or is it differences in measuring speed?

Overhead is part of it, also are you sure you are not mixing bits and bytes ?

That's probably it. iftop displays *bits, so I assume KTorrent displays bytes (capital B)?

Yes, so you need to divide by 8 in iftop (or you can probably configure it to display bytes)