I played 2 matches today with Svevan and Nile while I was the only one in the house and all other computers were off: it was unplayable with about a second delay on every action.
I tried switching from Bowser to Mario (since Bowser has some built in lag anyway) and it didn't help. Someone in my other thread said they played on a T1 and STILL had lag, so I don't think it's my connection.
Also, sadly, it seems like the latency indicator appears at random: it's there (and yellow) for one player who has yet to register me but when I went into Svevan's game, it wasn't there, but it appeared after I came out.
Same thing with Megaybyte's game: no latency indicator (though I never successfully joined that one).
I'm hoping Nintendo just needs to iron the kinks out of this. Not being able to play Brawl online after looking forward to it is pretty crushing, actually.