Along with the players of my generation I grew up watching Paco de Lucia rip through picado passages like a machine gun and always thought he was one of a kind regarding speed - that no one else could play that fast unless they had god-given speedy fingers. The man is certainly special - we all know that - but seeing many contemporary players play pretty fast picado bits, one realizes it may be possible to develop that muscle.
I don't have much more to say about gaining speed on top of what is already available out there, but just want to share a few points based on my own process. I played classical guitar for a long time and more recently started trying out flamenco. Throughout all those years, I was able to tackle relatively complex pieces but wasn't really fast. I remember practising the first movement of Aranjuez and having to slow down a bit to manage those long ascending and descending scales. I got better at playing in general but speed remained elusive. I worked on three-finger picado for a while to make up for the missing speed in my index and middle fingers. 3-f picado does work to a certain degree but it is difficult to have control over your tone that way and improvisation is difficult as you have to preplan every picado sequence in advance.
Eventually, having seen a few tutorials and some encouragement from fellow players, I did come around to giving regular fast picado a try and realized a few things. Primarily, fast-picado is not really the sped up version of slow picado - it seems to have it's own dynamics. In other words, simply practising a scale over and over again makes you play it better but not necessarily faster. Fast picado is almost a special technique in its own right like rasgueado, tremolo, alzapua, etc. and it is mainly based on utilizing the bursts of speed that you already have in your fingers. To achieve a speed burst, it is useful to practise playing the same note on a single string attempting to play 2, 3, 4 and more notes one after the other in a single burst or a twitch. Take a look at the following video to see what I mean: Picado Speed Right Hand Drill. Also, Grisha talks about something similar when he says "Try to see the scale as one big note rather than a series of notes that sound one after the other." You are, in a sense, trying to access that "twitch muscle" (if there is such a thing physically) that will make your fingers burst out a fast i-m alternation like a whiplash. Once you master that with a few notes, you extend the burst into longer scales. Again, take a look at this video inspired by one of Grisha's drills: Picado Exercise -Speed Bursts - 192 bpm.
Also, your hand needs to be relaxed and unconstrained when you do the burst to avoid spending muscular energy on anything but the burst itself. Just find the best right hand position that works for you to achieve that. In that sense it is better to avoid mimicking the hand positions of other fast players as everybody has a different physical structure. I did start out trying the right hand position of Paco to see if it worked for me but it didn't. My right hand would start hurting after 20 minutes of practice. Just compare my Agility Exercise 4 with Agility Exercise 10 to see how I adjusted my hand position to fit my own needs.
And, as always, don't rush the process. Start with short bursts and add notes slowly.
Also, check out this link