I've played some MMOs that handle lag a bit differently, in which both mob and character actions are sent from the server to the client before the client displays them. In that case, you do in fact get to see what happened as the server saw it happen, but I don't think you'd get any better success, because the lag delay just occurs at a different point.

In that type of arrangement, you would see yourself as behind or beside an enemy, press the button to select a backstabbing or flanking attack, then while your client is confering with the server regarding your action, you'd see the mob turn to face you. Then you'd get the result of your action back from the server and watch your character attack the mob head-on with what you had hoped would be a backstab. What you see your character do (that head-on attack) matches the result, but it's still no more in line with what you had seen at the time you pressed the button to select your attack than FFXIV's pattern is.

As Urthdigger mentioned, that pattern also causes problems with simple movement. Whenever you're experiencing lag, there will be a delay between pressing a movement button and seeing your character move, so people have a tendency to overshoot how far they intended to run or turn. Players get very grumpy about even relatively minor lag in a game like that.