The mouse "input lag" is actually just a delay which the game needs to detect a double click. Disabling double clicking in-game removes the delay. That's it.
If for whatever reason you've been using double clicks then yes, now you can't. But you can strike and block instantly and still use your mouse to navigate the GUI which most scripts lack (and that's probably the main advantage of KB+M controls in DS2).

Sorry if it's too obvious but when i googled mouse lag solutions i really saw only scripts and 3rd party tools so i wanted this to be here just in case there are some people who missed that setting and don't like the idea of using scripts.

Thanks to Maximum Overdrive for noting. If you feel like the lag is still there or you can't perform guard break of jump attack after restarting the game, try to open and close the mouse settings window. This seems to remind the game that double-clicking is disabled.

Remember, in order for it to work you need to close the settings window properly which means by pressing RMB and choosing "Back" or using Backspace. Pressing Esc won't save the changes.

Guard break and jump attack both work great once you get used to it. Holding W button may help.

I still prefer a controller and suggest using one but if for whatever reason you can't/won't, i hope this helps.