Face it, asking for fighting games with online to have zero to no lag is a tall order. Replicating that versus arcade experience is hard. Heck, when Virtua Fighter launched on the PS3 back in early 2007, it didn't have online. (Well, neither did the PS3, really.) Even Street Fighter IV producer Yoshinori Ono even admits that lag will be problematic for the home versions. Up front and honest, he tells the Official Xbox 360 Magazine:
Obviously lag will be a huge problem for online play. We're working on it. Compared to other games such as Virtua Fighter and Soul Calibur, they've got replay functions and so forth. It's quite difficult for 3D Street Fighter at the moment.
In order to prevent the lag we're thinking about trying to balance it up at user interface level and input timing by using joystick or something like that. We still haven't got a complete plan as yet. We're still working on it. That's all we can say at the moment.
Here's hoping they figure something out.