I’ve been trying to deal with the same issue with UE4.27 and Quest 3. The banding looks exactly the same, and also doesn’t show up in actual screenshots. I’ve also found that it is only happening in one project. I have a different project that is basically a clone of it with some minor changes and there is no banding there.
I am beginning to suspect that this is some sort of Quest accessibility setting being applied to specific apps somehow, though I cannot find any info on what it might be. I was looking at differences between the two apps in the Meta Quest Developer Hub logs, one with the banding and one without, but I can’t find anything that stands out as a different process/setting. There’s a lot to look at though, so maybe I’m missing something.