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Not quite. Lag is time between putting your foot in it and feeling acceleration. Turbo lag is time waiting for any boost pressure in the intake ports. While it may take an extra tenth to get the extra pressure, you don't need full boost to feel the result. Having driven a mid 90s Z28 with a rear turbo, I can say that a quarter second of lag is no problem, and speccing the turbo itself and the tubing sizes is far more important than how far the turbo is from the engine.
I readily admit that 500 rwhp is more than enough for a 3500 pound car on public roads, but it does NOT matter how many mpg it does if it isn't fun to drive. Anyone who thinks 200 is enough has never driven 500.
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