I think the main issue with red circles isn't lag, but the way they work.

Most people don't seem to realize that what counts is your position the moment the cast bar is finished, not when the attack is executed.
Let's say you spot a red circle, start running out of it, but the moment the enemy finished his cast bar, you were still slightly inside the red circle. Not paying attention to this you proceed to run out of the red circle and run quite a bit away from where it was spotted and then suddenly you get hit by the enemy attack.
So unless you're completely out of the red circle when the cast bar is finished, you are going to get hit regardless if you were on the other side of the map. Just remember there is always latency to take into account as well, if you feel like you just BARELY were outside the red circle when the cast bar finished, you could have pretty much been INSIDE the red circle on the server because of the delay between your computer commands and the server.