Reporting the same issue as well over on the realm Area 52. Except the lag has been persisting even without the Community Soup Event happening in the zone.
Went to other zones in the Dragon Isles and this issue went away upon leaving The Azure Span zone. The lag makes it really hard to do quests that are up in that particular area.
Edit: It looks like Blizzard is aware of this issue and working on a fix.