I can confirm this bug. Here is some more technical info from someone smarter than me on Reddit.

best I can tell, the game stops jittering the sampling points, resulting in effectively no meaningful AA or upscaling effect; dlss appears to still be enabled insofar as the game is hooked into the .dll and sending data to it, it's just that it's effectively only using it as a dumb upscaler similar in quality to a bilinear filter (though if you've forced dlaa, this effectively just means it appears as though things were "turned off")
https://www.reddit.com/r/ffxiv/comme...mment/lat895a/