Sounds like an unoptimised, unfinished game, unsurprising during lockdown, let's see how it turns out. To me it's just some minor LOD/shadow/pop-in bugs that will get ironed out with a bit more time. The core game itself looks absolutely fine.
I agree with your central point, I don't think 120hz is worth it for a lot of games and I prefer fidelity mode also (for anything that isn't very fast paced). I'll probably enable it in Warzone, Rocket league, and maybe Dirt 5, not sure yet.
But I get a bit triggered when people imply that high frame rate gaming looks better on PC.... sure, it probably does if you have a very expensive PC and managed to snag a 3080 (which very few people have managed so far), but these consoles will do high frame rate gaming at settings beyond what 95-99% of PC's currently do HFR gaming at.