It's like this:
On very low it's almost snappy.
On low it's just a bit more lag.
On medium I got the first miss when clicking on an NPC. Of course a lot more lag.
And it obviously goes worst from there up.
What I have also noticed is this lag also affects mouse position detection because there is a delay between hoovering the cursor on/off an item (button, dialog choice, etc) and the item glowing on/off.
Could you show me CPU usage during gameplay? Use Process Explorer, it has nice graph.