The lack of issues on an external display would actually support my theory, as a lot of external displays don't support DSC. The XDR display does indeed support and run using DSC on the 5500 and 5700 available on the Mac Pro.
@joevt while that may be true what your saying, there's still hardware involved in allowing DSC to be supported on all of these graphics chips. In order to support 2x XDRs on the iMac and MacBooks equipped with these Navi based GPU's, the DSC hardware is present regardless of whether the current display mode supports it.
Why else would basic 2D graphics output be difficult to figure out and have it running without glitches? A company like AMD has been making solid and visually accurate display outputs for decades - that's why to me, the major difference in this generation of cards we have with Navi is really only down to DSC support at that hardware and software level.