Yes but rollback and replay still looks good in practice and is considered state of the art in latency dependent games (like fighting games).
The ideal solution from a latency perspective is non-fixed time steps, but there are a lot of downsides of course. The rewind/replay solution could be improved with some tweaks. You could set a flag in the temporary time step to disable all irreversible state changes like dying, so you would never see/hear a flicker of death.
For local inputs, the fixed timestep is always a frame or smaller, this is not an issue unless you're over a network
Edit: Oh i see, this is a problem with the commenters suggestion of predicting the future though