Alright, I’ve done all the tests I can think of and I found out where the issue is. The reason the physics weren’t jittering in a new project in 4.16 was because the frame rate was so high capped at 120. In my main project the frame rate at its highest is somewhere around 90-100.
I went back to the test project (freshly made from 1st person template), and I capped the frame rate to 100 and less. With substepping enabled for physics, at any setting it seems, it starts going insane and jittery even capped at 100 frames and just gets worse the lower it gets from there. The problem must lie somewhere in the timing of the physics or something to do with frame rate. I dont know what to do about it on my end though, but hopefully that will help point in the right direction.
I went back to my 4.15 project when the settings were stable and did the same locked frame rate tests, and the physics were completely stable even as low as 15 frames. Something is definitely different since 4.16.