(I've inserted multiple full-size images. They're downscaled to 1080P, but if it's still causing lag let me know and I'll insert them as thumbnails)
So after really looking at this rather than begrudgingly focusing on reworking my viz mods for 2.0 - I think it's a stop-gap, meaning they did it on purpose.
Reason being that (I think) they've made serious changes to their RT shading model, either to satisfy some unsaid prerequisite for RR(Ray Reconstruction) or just making changes. People have blamed RR for making characters... chalky/smeared, that's true in non direct light scenarios certainly. Think late day outside of Dicky Twister where you have lots of neon lights but nothing direct. Even with RR off though it's not the same as it used to be. The SSS model for skin has changed as well, likely due to make use of RR. I'm certain of this as a skin mod I previously used gave me similar results to what the base shader did when turning denoising off pre-2.0. Hair shadows aside; Just look at how dead characters are now compared to what they were...
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The lost depth, the lack of specular highlights and gradations from dry to oily skin. Gone.
Another striking example is that characters almost look as if there's a second model not being drawn that's replicating their movement. You get areas of solid blackness that undulate across the NPC's surface, sometimes as if there's an unseen box in front of the camera that occludes light as well. That's surely not what's happening, but it looks that way and I suspect it's a consequence of the changes to support RR. This is most prevalent when they are in motion, but you can catch it if you're in a dialogue sequence and the character rocks back and forth a lot, especially if you zoom in.
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Wait a minute, Alex, you're not saying.. Alex? WTF?
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In WKit one of the changes to the env is a new table called "CharacterBrighteningAreaSettings". With this off, at distance, character models are solid black regardless of the world lighting. So we don't even get the actual ground truth global illumination we had in 1.63.
Thirdly - look at the edge contrast on the head hair below. Hell, the entire model. It's almost like an inverse pre-multiplication error. As if he's bathed in shadow and re-lit... and the hair glow is even stronger that before. Previously Denoising was causing the hair glow when RT is on, now RR is doing it even though it's purpose is to solve the issue that denoising causes all while introducing artifacts of it's own. Great work...
Fourth(also below image) - is that when using Sosuine's RT shadow restoration mod, hair shadows from stubble and bears looks downright awful on skin. Starkly dark, just bad. Not Sosuine's fault to be clear. Just check out this almost absurd darkness that looks like an overblow AO pass. You can't see it because of what is happening, but his facial hair is actually white!
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I don't have images for the last issue, but one of the touted benefits of this was to be increased rendering accuracy, but so far I haven't seen that. Light and shadow motion rendering are much better now, but I still see tons of areas where shadows are wiped out even more so that before. That's not a result of more accurate rendering, because without RR and denoising off I can see everything clearly - it's because RR is acting as some kind of Deep Learning Image Based Lighting and over correcting whats on screen. Sometimes it creates there peculiar bright and dark spots. It's bad in it's current form.
So, my take is mostly the same as before; CDPR either f*cked up and/or ran out of time to fix it... leading to a f*ck up and disabled some stuff to cover their tracks while figuring this out in the mean time. Or it's a new RT shading model gone awry - result is the same. It's bad. The game runs even worse while looking substantially worse other than reflections. Sure puddles in the rain are incredibly crisp but now a fantastic cast of characters look like mid quality silicon sex robots amongst other issues.