Update: Fixed the input lag issue I was experiencing.
Issue: Having two PS4 USB wireless adaptors plugged into the retropie at the same time was causing interference in the Bluetooth signals causing variable input lag when playing multiplayer games like street fighter iii: third strike.
Fix: I got a USB extension cable, plugged one end into the retropie and connected one of the dongles into the other end. This allowed me to create a bit of separation between the two USB adapters which was enough to remove the interference they were running on each other.
Hope that helps anyone else running into this issue while using multiple PS4 controllers connected to multiple USB dongles on the retropie. Btw, the dongles have worked out really well in my experience, much better (in terms of input responsiveness) than connecting the PS4 controllers directly to the Bluetooth from retropie.