Well, we have to differentiate between playback and monitoring.
For direct monitoring before the interface or (with just a little latency) through the interface, plugin latency and it's compensation is no problem at all. It's just like mixing. The sound may come one second later but it does not matter because you play along to what you hear. The compensation puts your new data to the correct positions.
But software monitoring is a nogo with latency. Everything we put in comes out later. We should avoid software monitoring whenever we can.
Of course we can handle the playback mix. We can freeze or bounce it. The problem is the input monitoring with latency-rich plugins in the input path. Impossible to play in time this way. The best you can get is a compromise. Little latency, small buffer, good personal adaption.
You may even set the compensation to "audio and instruments", keep your auxes and outputs plugin-free, use the input channelstrip fpr realtime effects and monitor via an aux channelstrip - this works well, but it does not help if plugins in the input path needs too much processing time.
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However, in the particular case we are talking about, I suspect that most of the latency comes from the playback mix. The pitch shifter is in the input path and I can hardly imagine that a pitch shifter with half a second latency exists. And since Jay saw the latency going almost away after he had set the compensation to "audio and instruments", I am pretty sure that there are a couple of time consuming plugins in auxes or the output channelstrip. Or just one plugin with a ridiculous long latency.
Of course there could be another problem we haven't discovered yet but normally the issue should get fixed by disabling those plugins or bouncing the output mix and mute all other tracks during recording.
If ou have a masterbus before your output and a clean output channelstrip (both is highly recommended) you can easily send the master bus to another bus and record your playback mix directly to a track.