It mean the problem is not with the inputs. Its AFTER the input. Somehow it seems the game engine receives the data correctly (no input lag) but its does not translate that input fast enough to the handling part or something.
Based on how i understand the words "input lag". Maybe its my english or maybe i'm being picky. Anyway, I can't explain better than this so sorry if I'm misreading.
I've had another thought.
We've seen that telemetry reacts instantly. We've seen that the game world (the car, mostly) does not.
The telemetry is graphically simple. It's part of the HUD that gets switched on and off. It makes sense to me that the HUD is separate from the "world" as it were, the car and the rest of it.
What if there was a delay on the display of the world? The telemetry correctly shows that the input signals are being received and processed immediately. But the world that you're seeing on screen is half a second behind what the telemetry is showing, and what you're inputting to. I'm sure there could be any number of reasons for this, the need to run the display output through filters and post-processing being the obvious one.
Basically, it's not that the control is slow. It's that the game is running it's display half a second behind what is actually going on in the physics processing threads. It's not input lag. It's display lag on the part of the console.
I'm sure someone can come up with a reason for this to be false, but it's holding together for me at the moment.
This problem is annoying me more and more as I move towards faster cars. You have to plan ahead so far to drive with it. It's easy in a Miata, but in a GT3 car if you forget about the lag for a second and drive it like it was GT5 you're in the wall. I'm tossing up whether I go for the GT1 championship now or if I just save it for later. This problem is all over the official EA boards too. They're going to have to make some statement about it before the week is out.