I highly doubt they deliberately degraded the visual quality. What developer would intentionally make their game look less good? (plus, they explicitly said they didn’t do so in the Q&A)
After all, there are lots of sliders and settings - from low to ultra - in order to allow for performance optimizations by the user. While it might make sense to tune the low, medium and maybe high settings a bit in order to fit current PC performance ranges, there is no real reason to tone down the “ultra” preset which is meant for best quality. The XBOX version will probably come with a custom setting set by the developer so it works best on the hardware - no need to tune down the PC visuals.
Plus, a lot of the performance enhancements came through CPU usage optimizations. That’s why people with a low number of CPU cores don’t experience as much stuttering as before. And some of the changes made to the visuals are clearly not related to performance, e.g. water waves. The patch notes state that the wave hight as a function of wind has been adapted. I don’t think this change really made an impact on performance.
As to the LOD, I think there are two things coming together: firstly, there might really be some new bug introduced in the last patches. Secondly, there is a lot of psychology involved. After flying in an area for a while, I personally find myself finding more and more little detailes that are a bit off. They have most probably been off right from launch, I just never noticed because I first saw the big picture. Coupled with the expectation of overall improvements after a patch, this quickly leads to disappointment.
Hence, I think it’s really important that we try to remind ourselves to keep this discussion on an objective and constructive level. The devs aren’t trying to screw us, they’re just really hard at work and - as we’ve all seem - make (human) mistakes.