Yep. I've currently got X2HR's, Meze 99 Classics and Sennheiser 58X's and I'd choose plugging any of those into the controller over the 7X that I had.
I'm sure the audio is compressed but I feel to the vast majority of people, they just wouldn't notice and the sound will be pretty good anyway.
Unless you're an audiophile, controller sound is more than good enough in my opinion. And obviously comes with benefits like not having to mess with dongles, a different headset for different consoles, cables to amps/DAC's and out to your headphones etc. As someone with kids and my consoles in the living room, running a cable across the room isn't an option really. And to my ears, controller sound does a good job.
Also maybe it's just me again, but I tend to play for fun rather than competitiveness. I'm not looking to analyse game audio, I'm listening for fun. Like listening to music, I'm not someone who listens to music analytically so a lot of these neutral headphones just aren't for me.
Anyway, TLDR, people are different and controller audio is more than good enough for lots of people 😁