Hi Jules
I'm not sure why you mean "If you're monitoring directly, I'm not sure I understand why latency should be an issue for live players." ?
I plan to use a separate machine for MIR, but the latency issue is still in play here too as I see it - when I play on my main keyboard the midi goes though the main DAW then via MOL or similar to the MIR host's instrument, which then introduces an extra 1024 samples delay before sending the audiosignal back via eg. ADAT to the main DAW and finally to the speakers for me to hear. So there is at least 25 ms delay (more likely 35 ms) btw I press a key and I hear the sound playing.
But offcause having a bypass function will help a lot here - running 128 samples buffer instead while recording midi, and then raise the buffer when switching on the MIR functions.