I think what the vast majority of the people in this thread don't understand is that there are a couple different ways to handle lag, but it cannot be eliminated. People claiming they play other games lag free really mean that those games handle lag differently.
In some games, there is no button lag, you hit "jump" and you jump. However, what if, at the same time you hit jump, another player did an attack that would kill you? The game must have a way to deal with this dilemma with latency. It is possible that you jump, but then just appear dead instantly. Or the game may decide to make that person's attack wiff.
With Brawl it is obvious they decided to implement a button lag, so that no player would ever get an advantage from having an action on his system take priority over someone else's. It's annoying but it could be considered better than attacking people who aren't actually standing where you think, or having large spikes of resets.