40ft usb extension cable

Normally USB 2.0 has a distance limit of 17.5ft. You have to go with the CAT-6 extension. At the Best Buy I work at we don't even sell CAT-5 anymore. It is all CAT-6. Even the 350' "crimp your own" kit is CAT-6. So you can get an extender like what you have linked and a 50' CAT-6 cable then you should be good as gold.

Do you guys think I'll have any mouse lag with this method?

And a good thing too. USB 2.0 has a max transfer of 480 MBits/sec. CAT-5 is good for 100 Mbits/sec.

Mouse lag? Let's see - about 4 msec through each adapter and 2 msec through the cable ... no, kidding.  

If it works, you will need expensive, lab grade equipment to measure any lag present.