What you’re describing is called “rollback netcode”. It’s a pretty cool chunk of theory, usually used for fighting games which are extremely sensitive to latency. This explainer has some nice graphic demos
With rollback/lockstep, there's no need for a server simulation at all. Most games are not doing that: the client's local simulations are less important than the server's simulation, even missing information (good to prevent wallhacks). Any dropped packets are handled with the server telling the client the exact positions of everything, leading to warping. Dropped packets and latency also only affect the problem player, rather than pausing everyone's simulations.
If you were able to make it, it would be kind of a Hail Mary moment for making easy server games without the latency.