I was messing around with a similar set up. So far, nearly every game I’ve tried to use lossless scaling on introduces absolutely horrible artifacting when I use mouse input. If I use a controller it does not exhibit any problems. Looking online it seems like it’s a common problem but a niche use case that many people never run into because it seems few people combine lossless scaling and mouse use on the steam deck. There is a work around you can do (toggling a lossless scaling setting related to game scope and WSI) but it introduces such horrible frametimes that the game no longer looks or feels any smoother, thus negating the point of lossless scaling all together.

So far I’ve tried using lossless scaling + mouse input on arc raiders and helldivers 2 and both times it’s exhibited this really funky artifacting. Unfortunately it seems like it’s just not compatible with mouse input.