Never had this 'lag compensation' thing or seen it until I seem that video, if we are talking about lag because the host has a shit connection, then yes.
My 360 has never frozen on me whilst playing bops2, in fact, I traded in my ps3 when bops came out because o the constant freezing and ridiculous drop in frame rates and shitty connections.
360 shits all over ps3, that is fact, 360 never has any of these problems ps3 users talk about, yet, they are the majority of people talking shit about the game.
If you want a good connection, pay for it, there's a reason why ps3 has free Internet, because they know the service they offer is rubbish, paying a subscription, when, if you do the maths is not very much, yet, offers you a far better service, is a small price to pay to not go trough all the hassles of 'shitty connections all night' 'games screwed keeps freezing on me' etc etc.
And the argument of 'oh some of us can't afford it' I gather the majority on here are older then 16, a month subscription on 360 is about 10$, which equates to $2.50 a week.
And as for ps3 having a bluray, ain't it nice you can watch bluray movies on a gaming console.