An adapter would work on the pixel level, rather than the frame level so there shouldn’t be any lag. For 4K 60 Hz: A frame is 60 Hz or 16 ms. A line is 133 kHz or 8 µs. A pixel is 533 MHz or 2 ns.
I’m not sure how much information is required by DSC. The DSC specs are freely available though. There is C source code so you can test it with various images. VESA describes DSC as a low latency, low complexity codec. Wikipedia says that for HDM 2.1, DSC is only for resolutions higher than 8K but that doesn’t mean an adapter couldn’t use DSC on the DisplayPort side.
I don’t know how an adapter will handle other features of HDMI 2.1 such as VRR (maybe convert it to DisplayPort’s Adaptive Sync?)
Most of the lag will probably come from the TV instead of an adapter. According to https://www.rtings.com/tv/reviews/lg/sm9500 , it has 13 ms input lag for 60 Hz game mode. For 120 Hz it’s 7 ms. Outside game mode, it’s up to 84 ms.
New cables will not be enough to test HDMI 2.1. You’ll also need a HDMI 2.1 source. AMD and Nvidia don’t support it yet so this is where an adapter would be useful.