> But then there is only one RT (the average) per condition for each subject. So that makes
> only four data points per subject to adjust for between-subject variability in RT. Isn't that too little?
That should be fine. It's the number of subjects that matters the most.
> isn't it problematic that both Cond and RT are used as predictors but they are highly correlated?
By being "highly correlated", do you mean that the average RT for one condition is higher than the other? If so, the centering strategy I mentioned previously (centering within each condition) should take care of the issue in addition to maintaining the interpretation integrity of the condition effect.
Gang