Getting transparency banding means that the MSAA is working at least. The sharpening is good for when you have a small texture resolution relative to the view (like when you show your face into a bush), but may also make the aliasing worse at distance if it shrinks the gradient too much.
Testing this on PC with the default 5.6.0 VR template, and I am also experiencing more flickering than there should be. The higher the MSAA level the less it flickers, and looking at frames with RenderDoc it seems to render and resolve the MSAA correctly per-frame.
The effect seems to only affect the VR render. The Editor viewport is practically flicker-free, even with the camera moving. Setting the VR headset down on a stable surface shows that it still flickers, and turning off MSAA makes the flicker apparent on all geometry.
I’m not sure, but I suspect this issue isn’t related to MSAA or AtoC, just that they are only partially successful in mitigating it. Maybe it could be a TAA subpixel jitter function that gets left on for the VR render or something similar.
It’s possible that my issue is separate from yours though. It’s hard to say for sure without seeing it in action.