Sorry, I've been gone all day.
Yes, I was originally setting it to the middle of the screen, but I guess I copied the code before I had a chance to look over my changes. It is supposed to be al_set_mouse_xy(display, screen_width/2, screen_height/2) (I'll edit the original post).
As to why I don't use al_grab_mouse(): it seems to keep the mouse constrained the the entire window, and not to the drawing area. This means that the game won't update my mouse location when I'm hovering over the title bar (kinda tricky for and RTS game or something).
I'll set the mouse position whenever it goes out of the drawing area and see if that fixes my graphical lag. Thanks for the replies, guys!
P.S. I'm not using a TV for a monitor, but I'll keep that in mind for any future games I create. Thanks, Kris!
EDIT: I changed
1cursor_x = ev.mouse.x;
2cursor_y = ev.mouse.y;
1cursor_x += ev.mouse.dx;
2cursor_y += ev.mouse.dy;
in my code and then set my mouse x,y to the screen center and it worked! Thanks, Peter!