Without a way to measure it and some hard data it's pointless to try argue this.
> average human reaction time appears to be around 200 to 250 milliseconds
Reaction time tests are really contrived and it's always a laughing point when they're quoted in irrelevant context: We usually get cues that allow to anticipate events from distance. Especially in gaming and musical context. I've seen how the 200-500 ms reaction time figures often quoted have been "deviced" and what it measures is the scenario that you are blind and deaf and suddenly your blindless is gone and you react to that singular and sudden event.
I already use a CRT and I can put it to 200 hz should I wish to, but that doesn't really tell anything about latencies. Reacting to game events is conceptually similar to a "feedback loop" in electronics, except that added latency increases the loop lenght while ability to anticipate (look-ahead) decreases it. In a game like TrackMania or many arcade style games, the intensity and satisfaction derived from the game is strongly correlated to the lenght of this feedback loop.
"To cushion jitter, Nvidia is increasing the amount of lag in the graphics subsystem".
Lets say the loop length is increased to reduce jitter (which may have something to do with an architecture that was designed for office/multitasking first in mind) that work better with a shorter feedback loop.
In this case, a theoretical fix is to keep the loop length the same (eg. target 120 hz vsync for 8,3 ms interval) to reduce jitter & tearing, but when user input arrives, the OS or game don't have to use a "polling" method to react to this, the keyboard/game controller and bus can be designed for low latency in a way that does not require any polling or electricity (schematics for soft switches that don't consume electricity are out there, eevblog detailed one). This key event can be made to use similar technology as 10 Gigabit ethernet or firewire, so the keyboard directly avails the buffer to the game without any OS intervention. The game can then look at how long the typical game loop took on the current system, and decide if there's time to re-run the loop based on the new input before that 8,3 ms timing window closes. This will shorten the feedback loop, as otherwise you'd possibly get that 8,3 ms additional delay.
Then there's the matter of 2D rendering. I have seen stats which suggest that for 2D rendering, XP with the appropriate card and drivers, is 10-20 times faster than Windows 7 with latest generation as of the making of those stats. 20 times faster and no jitter cushioning could potentially mean that XP+ old drivers and old graphics card has lower end to end latency. I saw 20 ms quoted for modern 3D stack driver latency. But to measure this, some measurement hardware is needed.
Based on my observations and feel of things, I believe that 50 ms latency end to end is likely typical for a gaming PC today. That is WAY TOO MUCH! Just by switching from LCD to CRT you can cut maybe 20-30 ms, so that's better, but from experience I know that you really want <20 ms to "feel in sync" with the game or musical instrument for a consumer level experience. At professional/competitive level, <10 ms is necessary.
No matter how many hz your display is updating, you don't really know from that figure how long it takes from a key press for something to happen on the screen.
It's much much easier to play when you don't need to input ahead of time (lag compensation) and rely on memorization (the increased end to end lag reduces the "anticipation horizon"). When I try playing things from memory, it's similar to playing piano from memory, instead of playing to the music, you're playing to some memorized thing and timing inprecision accumulates quickly and the outcome isn't as musical as when feeling the music already sounding and playing to the patterns and timings established live, not from memory. And in case on TrackMania I've noticed consistently from years of playing now that my first race performance is often best because I don't have the memory messing things up and it's much more about anticipation based on the visual input, very similar to live jamming in music, you're anticipating what other players do. Great groove involves millisecond precision (swing/shuffle) and anticipation, musical context and "feeling it" makes that possible.