Same issues here, started with my 13 pro max sometimes during IOS 15.X, not sure but Apple messed the processing. Photos are more compressed now, just look at the size of them (HEIF or not, too small to incorporate enough details)..Now on my 14 Plus, same horrible oil paint effect on indoor photos. Skin and hair are completely distroyed no matter if it's a normal or portrait picture. Indoor selfies are simply garbage.
Outdoor photos are ok as long as you do not crop in after, to see some details...
I agree, the HW is more than capable but their camera processing is among the worst I've seen. Samsung used to have the same problems and still has with their main camera app, but at least they now have the Expert Raw secondary camera which is not blowing the JPEGS on indoor shots, so it's a very good solution.
I am using an iphone for different reasons, but for sure the camera is no longer one of them. I can't believe this phone has such a poor camera processing.
Btw, I've tried to use Halide, same results, same bad processing.