Try some definitions on for size - lag time is defined as the time between when the official clearly signals the clock to stop and when the clock actually stops.

Please explain to me where you find this rule about lag times having anything to do with official counts!

Mark,
I see your point about this situation, especially after reading over 5.10.1 D in the NF handbook. However, I'm confused over something. Look at 5.10.1 B in the NF handbook. Correct me if I'm wrong, but there is really no difference between the two situations, yet in one the full time is put back on the clock and in the other, the referee allows one second for lag time. Someone HELP me out!

Here's how it goes in NF:

(D) - The official looks at the clock as he blows the whistle, so he knows the exact time remaining - one second must be allowed from there.

(B) - The official blows the whistle, then looks up at the clock - the lag time there is interpreted as coming during the time between whistle and look (that way a team isn't "double penalized") - so the book basically says (in that situation) that the whistle is interpreted to have come at four.