Fullscreen XWayland clients are blurry with xwayland-native-scaling

Affected version

Fedora 41 (beta)
mutter 47.0
gnome-settings-daemon 47.1
wayland

Bug summary

When using the new xwayland native scaling !3567 (merged) fullscreen games look blurry even when their resolution is set to be the native resolution of my display. A similar issue was mentioned in the MR itself as well: !3567 (comment 2191969). I tested a native and a proton title (both vulkan) and they both exhibited the same behaviour.

Steps to reproduce

Enable scale-monitor-framebuffer and xwayland-native-scaling
Set scale factor to something fractional (I used 125%)
Launch a fullscreen game
Set the game's resolution to the exact resolution of your monitor (in my case 1920x1080)

What happened

The content looks blurry, like its being poorly interpolated/scaled from another resolution. Fairly visible in the main menu, especially on small text and icons.

What did you expect to happen

The contents should look sharp since the game is rendering at the native screen resolution.

Relevant logs, screenshots, screencasts etc.

Here is a comparison of no scaling and fractional scaling at 125% with xwayland native scaling turned on. The blurriness is fairly visible in the settings panel and the top right buttons. Please view these images with a 1:1 zoom level to avoid further scaling artifacts.

Fractional, 125%

$TeamFortress2-fractional_blurry.png$