The input lag is a non issue on a 4090 (probably 4080 too tbh) with frame gen. As DF's and HUB's recent videos outline, they also say that the technology really hasn't been marketed well, as it's been marketed for mid range cards, yet those cards can't handle it without input latency, it only makes sense on a 4090/4080 due to the already high baseline fps, meaning the input latency feels about right on these cards vs not using frame gen. For my own POV, I would not be using the tech if the input latency was not to my liking.
Nothing wrong with the image quality, unless you mean ghosting, in which case that has nothing to do with frame gen or dlss as it's a byproduct of the implementation of ray or path tracing in the game engine rather than the upscaling or frame gen tech being used. Turn RT off but frame gen and dlss etc on and ghosting goes away.
There are only two options here.
1: Use path tracing with ray reconstruction, which offers superior accurate lighting and shadow control, at the expense of some ghosting because it's an RT technology being used, along with a big fps hit. You also get better detail textures in general because of DLSS 3.5.
2: Use Ray Tracing instead of path tracing, which results in better fps, but doesn't have accurate lighting and shadow, and light leaks into areas where it should not leak, doors, faces etc. With RT enabled the engine for some reason ignores objects like skin when the ray bounce is being calculated, so the light that would otherwise diffuse over the face, just passes right through it whilst lighting up areas that should not be. Turning RT lighting off fixes that as screen space GI is more accurate, but it's not real time dynamic and comes with the flaws of screen space as a result.
Example:
Faces - PT + RR + DLSS Quality + Frame Gen:
Faces - RT + Psycho Lighting + Psycho SSR + DLSS Quality + Frame Gen:
Notice areas like the blue light illuminating his left eyelid? This area should not be lit up at all as its under shadow cast from the nose, the PT version does it accurately.
3: Use screen space and have RT off, which results in all the flaws of screen space which has been covered plenty of times.