Definitely head into the city. It's not close but you'll be there soon enough.

You can be in the centre of town until 9pm if you want to push it; getting back to the airport by 10pm (I'm assuming you're on the flight that departs at 11.45pm). If so then you're well timed to enjoy dinner in the city. The F lounge at KUL is nice, but no more than that, and not the kind of lounge you'd make an effort to arrive at particularly early.