I found a thread on Reddit where many people have the same problem, although they refer only to typing on the keyboard. I have the same issue when I type on the keyboard. It is not only the lag when I dictate.

Reddit

I wiped the iPad and set it up as a new device. Dictation was good for the first two times but now it is slow again. It is only the case for other languages than English (e.g. German and French). It seems to be a bug in iPad OS 17.

No, it is just incredibly slow. I am going to reset the iPad and set it up as a fresh device in a few days. I need the dictation function very often and the current situation is unbearable.