I Finally Found the Solution to the Performance Issues

Not a solution.

Turn of Nvidia Reflex and turn down audio channels in settings

Smooth motion increases fps twice with almost no latency, if u have unused GPU capacity. Or "reduce" your fps by half(not really, it is fake) but because generated frames are run only in GPU, you save "up to" 50% of cpu performance that allows You use more for shader compilation resulting in faster loading and lower fps drops. Enabling 100gb/unlimited shader cache (is near Smooth motion option) Will further reduce cpu usage more for each already compiled shader, slowly improving performance for each hour spent in game. Only con is it uses like 30gb aditional disk space.

There is one "Bug". Game fps meter doesn't recognize generated frames so it shows 1/2 instead, but... that is not Real. It counts only Real frames.

I dropped from 120 to 79, but have fps cap 158 (gsync). So in reality I have 158 (79 X 2) rock stable. My dips improved from 10 lows to 30 fps by Enabling more shader cache. Framegen makes it 60 and game is Smooth even in worst fights. Only con of low fps framegen is games gets slightly blurry and game is less responsive in heavy fights, but is not laggy. So, it behaves how dynamic resolution should work, and is not. Game looks only worse instead of "lower fps". So Just these 2 tweaks Made game look like 60 fps instead of 10. Oh, There is one big con. If you drop to really unplayable fps, like 10, Smooth motion makes it worse. It Will be unreaponsive and game start looking like LSD simulator. XD

I just tried this and it works. Downloaded the Nvidia App and enabled Smooth Motion for POE2. Game runs super smooth now when there is a lot happening on the screen. Fps doesn't dip hard anymore. There is a slight bit of input lag for me (like playing on a 100ms server instead of a 50ms one) but it's still better than destroying my eyes and getting massive lag at times.

I'm on a 4070 laptop with pretty much everything set to max. The lowest I've seen it dip now is 40fps. Though I think that is actually 80fps because of the tech working in the background. It still looks really smooth at 40fps.