Any mature generational GC should handle this with literally zero overhead. Assuming it is not doing a nursery gc every millisecond, all those objects should die in the nursery almost immediately. It has been well understood for at least twenty years how to do that in O(live objects), and the JVM has for all its many faults a very good garbage collector. So I am quite skeptical. This is also at odds with empirical evidence which is that going from 1.7 to 1.8 with the same world improves framerate.
Now the JVM gc has about a million tuning parameters and most hardcore Minecrafters have a witches brew of tuning that they run with. It's far from impossible that those tuning parameters are totally inappropriate with 1.8. But the GC should handle this fine.