I didn't read everything, but lag is much, much more than a psychological annoyance. First of all, how many people have been stuck at the spinning ring or removed from a game all together due to lag? It may be psychologically taxing but it's not all in our heads.
And yes, on the laggers screen, I am already taking damage. But on my screen, I'm not. How can you say I would die anyway if I was never given the opportunity to defend myself?
That's like some guy knocking me out from behind when I wasn't looking and everyone being like "he threw a hard punch, doesn't matter that you didn't see it coming".