for example, I am presented with severe graphical distortions, but also no change in fidelity or resolution on either the Headset or the window on my Desktop.
FSR2 only works with the Forward+ renderer. Also I am unsure if FSR2 has been altered to work in stereo. Bilinear upscaling should work.
That said, generally upscaling in VR has more negative side effects than positive ones especially because the lower resolution will really stand out at the focal point of where you are looking.
If you are using the mobile or Forward+ renderers you will want to turn on VRS, if you are using the compatibility renderer you will want to turn on fixed foveated rendering in the OpenXR settings. Both ensure that the further away from the focal point, the lower resolution we render at, making a much bigger saving than upscaling while retaining a high resolution where it counts.
See A better XR start script for the code that enables VRS and checks for foveated rendering being enabled on compatibility.
MSAA should work though it is better to configure those in project settings to prevent re-creating buffers (which can cause issues on compatibility). On Vulkan there is a performance issue on standalone hardware that will likely be fixed in 4.4 (there is an open PR for this) but on desktop it should be fine.