Update on this:
Native OpenXR does actually work BUT using the upscaler feature in WRC will cause issues as mentioned in the OP.
An upscaler like DLSS will not work with native OXR runtimes at all and while it can work with Steams OXR it causes other issues due to extreme vram peaks on stage load and end leading to freezes and crashes. This brief peek can use 6-8gb extra of vram, the workaround is to reduce vram consumption.
An upscaler is vital for performance and DLSS can work well so I hope that bug is fixed.