In order to show the properly random and non-deterministic behavior (e.g. random BSODs) that Windows users have come to expect, MS Windows needs to continuously gather high-quality entropy from its surrounding environment. That's why it stops when you're not wiggling the mouse; it's just waiting for you to provide the additional entropy it needs.
No, it’s actually a little-known feature that allows Win95 to temporarily upclock the CPU during peak loads, using the power generated by vigorous mouse movements.