I checked the development console to see what is going on. Minecraft is crashing because it keeps fetching Minecraft.net files and I can't access Minecraft.net on my computer. So instead of by-passing it keeps trying to fetch it. Everything else loads fine, but before in 1.3.4 if it couldn't fetch Minecraft.net it by-passed it. Even though everyone looked like Steves it still run lag free. Note: Minecraft isn't modded any way on my computer as you can see:

Is Modded: Probably not. Jar signature remains and client brand is untouched.

That is under the crash report.

Please Mojang in the next update can you allow it to by-pass fetching Minecraft.net for skins so I can play? I payed $26.95 and I hope i can at least play it.