You've hit the nail right on the head.
To be honest, I really want to give BlOps 2 a chance. In playing with bots and during LAN games, I've had a lot of fun. The weapons all feel relatively well balanced, the maps are fun, and overall it feels well designed, even if it's still a console port.
The only two things that bug me are how the game handles skill distribution on teams (is this match-making? don't really know all my lingo here, sorry) and of course, lag compensation. The former's just mildly annoying most of the time (even if the round is going 5/95 in the other team's favor, I don't really care, I'm just in it to have fun) but the lag compensation just completely kills everything else.
I've seen videos from earlier on in MW3, and I haven't had anything quite as ridiculous as some of them (involving players literally teleporting around because of the lag comp), but in a way, it's worse in BlOps 2 - The game's just as unplayable (arguably, you might say it's more playable though it's still pretty bad), but it's almost always a lot more subtle about what happened, so to speak.
Honestly? I do not have a problem with lag compensation at its core. It's a fundamental piece of any multiplayer FPS (or any multiplayer game, I think) in order to make the game fun and playable for everyone. Black Ops 2 is no exception. The problem is that it's being way too harsh on faster connections.