Ultimately, there's the sense that Xenoblade 2 is a game of two halves - it's a visually upgraded experience over its Wii U predecessor, and holds up pretty well when playing docked, but the handheld experience just doesn't hold up to anything like the same standard. The game is impressive overall, but compared to the pristine works created by Nintendo itself this year, Xenoblade 2 feels like a step down in many ways.
So, as with SMO it's meant to be played in docked mode. Will play it like that anyway personally of course.
I solely played Mario Odyssey on the handheld and had no issues visually. I also played BOTW mostly handheld. However this game looks way worse in handheld by comparison. It feels gritty on handheld mode. I love the game so far and will probably get used to it but am certainly disappointed with the handhelds visual quality. I had no issues with the visuals in docked mode. Looks beautiful on the big screen.
The only thing that sounded like a big deal sounds like a bug that will likely be fixed in a patch. Since I likely won't be getting it this month, I bet it will be solved by time I play it.
I've only played in handheld so far as I just purchased the game today. Maybe its because I can't compare it to Docked mode but I'm loving it so far. Its beautiful and plays well. If its at a subpar resolution maybe I'm just not noticing, or maybe I'm just not far enough yet.