So i did some research and started to mess with settings. First thing i did, i was open up the debugtool in diagnostics folder and set the encode width to 3664 and also change pixel per display pixel override to 1.2. Defo made a difference, things are much clearer and noticeably sharper/smoother. Still could be better!
I then realised you can do effectively the same thing in the oculus app by upping the resolution. Instead of going up in increments i just cranked it all the way up to max which is 1.5x (cant remember exact range). Jumped into Star Trek bridge crew and wow night and day difference again, its noticeably clearer again and looks fantastic as it should!
Morning Jay, Ahh, the sweet smell of PLacebo in the morning, It is a wonderful thing

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First, in the Virtual Desktop streamer you should disable the "automatically adjust Bitrate option. Also, for better quality, set the Codec to HEVC.
In the Streaming settings in Virtual desktop itself. Stick with FPS at 90 and Graphics at high. But try the following
VR Bitrate at 100.
Spliced Encoding on.
In Beat Saber and other games requiring fast reactions and quick response times, you would want the lowest latency you can. While in games like Skyrim VR and Half Life: Alyx, a latency of 40-50ms is fine. But, latency depends on the person as well. So, you will have to find a combination that suits you best.
So try a few games with the settings above and see do they play ok. If you are happy, keep raising the Bitrate until you start to notice the latency. Then I would reduce it by 10 and leave it at that. I wouldn't worry too much about the latency figures in the Virtual Desktop performance overlay. Just play some games and see how they feel.
Ohhh, should have read your whole post first, you found out yourself what does and does not effect the Virtual desktop stream.
For a start, I would leave the Steam VR settings at 100% resolution per eye to begin with. Get the Virtual desktop configured correctly. Then this becomes your 100% setting in Steam VR. If you have any overhead spare you can up the Resolution per eye in Steam VR to suit yourself.