Time your code
It is most definitely faster to draw an image lots of times than drawing a circle or String lots of times and it's very easy to test. At the beginning of your paintComponent() method add the line:
paintComponent(){
long start = System.currentTimeMillis();
...
// draw 100,000 circles as images or circles
...
System.out.println("Rendering time: " +
(start - System.currentTimeMillis()) + " ms");
}
If the times turn out to be zero all the time, you can instead use System.nanoTime().
Paint to Cached Image
Another thing you can do is to paint these circles onto an image and only recreate the image when the content changes. If nothing has changed just draw that image onto the Graphics2D object instead of redrawing all of the circles. This is commonly called double buffering. You also can use Volatile Images to take advantage of hardware acceleration.
Create Compatible Images
You should also make sure you use images that are compatible with the user's monitor by using createCompatibleImage() as shown below:
GraphicsEnvironment ge = GraphicsEnvironment.getLocalGraphicsEnvironment();
GraphicsDevice gs = ge.getDefaultScreenDevice();
GraphicsConfiguration gc = gs.getDefaultConfiguration();
// Create an image that does not support transparency
BufferedImage bimage = gc.createCompatibleImage(width, height, Transparency.OPAQUE);
// Create an image that supports transparent pixels
bimage = gc.createCompatibleImage(width, height, Transparency.BITMASK);
// Create an image that supports arbitrary levels of transparency
bimage = gc.createCompatibleImage(width, height, Transparency.TRANSLUCENT);
More Tips
I'd recommend the book Filthy Rich Clients. It has lots of great tips for speeding up swing. Especially look at chapters 4 and 5 about images and performance.