Copying my post here from another thread:
I’m having this same issue with my new M2 12.9” iPad Pro. When dark mode is enabled along with either Night Shift or True Tone, there is an awful motion blur effect causing white text to turn red and look very distorted while scrolling (just as you showed in your video). I upgraded from an M1 12.9” Pro that did not have this issue. I figured the displays would be identical, but clearly something has changed. I don’t know if it’s a software problem or an inherent issue with the display.
I fired up my M1 12.9” iPad Pro before I sell it later today. I turned on dark mode, Night Shift, and True Tone and placed it directly next to my new M2 12.9” iPad Pro with the same settings enabled. Both are running iPadOS 16.1.
No issues at all on the M1 iPad. White text remains white and does not distort while scrolling. M2 has the problems I mentioned above: white text turns red while scrolling and appears distorted.
So, this appears to be a hardware issue. I’ll be taking it into the Apple Store soon.