Jimbop, if you have Vsync enabled (and probably do since you are using headtracking and don't want screen tearing) try setting the Multiplier to x2 rather than x4. With a 30fps webcam the smoothing will be computed for 60 frames and not 120 - that should reduce the lag - theoretically!
As far as I understand, with Vsync your only generating 60 FPS max so I cannot see any advantage in having a x4 multiplier of the 30fps that a standard webcam runs at. The smoothing algorithm has 90 copied frames to deal with when set to x4 and the game video is capped at 60........
