They should concentrate on developing effects that the card is actually capable of displaying, rather than faking frames to kid people in to buying a poor substitute.
Well, that would be nice. All of the effort seems to have gone into making ray tracing look nice, then coming up with workarounds afterwards to make the performance more acceptable. This is true even at 1080p for many games, but gets much worse as the resolution is increased.
Making a big deal about ray tracing is the key to them selling new and expensive cards, so it's not particularly surprising. Otherwise, people would stick with a card that can handle their favourite games at 1440/4k resolution (at 60 or 120 FPS), and call it a day.
The push isn't really coming from AMD though, they are just desperately trying to keep up.
Being bothered by input lag is something relatively new I'd say (last 10 years, but more than that for competitive games like Quake). In the past, input lag was just part of the game, thinking back to the PS1, and even further back to much simpler games on the Atari and Amiga. To some extent, players had to learn to compensate for delays, sometimes this would be part of what made the game more difficult.
Latency over the Internet in multiplayer games has pretty much always been an issue ofc, but that's quite a different problem.
It's different for everyone, but input lag wasn't something that 'took me out of games' generally, but poor framerate was, especially if there was a heavy bottleneck somewhere (too many units on the screen in a strategy game for example).