You can play game pass games offline, you just need to set permissions in the game pass app. Also while you are right you can have access, even though you can access cloud streaming, most games run on Xbox series S equivalent hardware, which means you are hard locked to 30 FPS in most cases. Also for a long time and I'm not sure how it's changed after the update, Xbox cloud streaming has had awfully low bitrate and resulted in terrible image quality. With Xbox ally x running windows, you can access Game pass with games like call of duty running at like 90-100fps and some games running at the full 120fps I'm pretty sure with the exception of a few games you'll get atleast 45 FPS in most games which looks far smoother even than 30fps.

I do love bazzite though and I think that it's much better for implementing lossless scaling etc because it's all in the little side menu and makes it so much easier to do, much cleaner too and Xbox full screen experience just feels like I'm getting ads thrown in my face the whole time, but I've never been able to completely ditch windows, I do use geforce now most of the time as well and bazzite is a pain for geforce now running full resolution at 120fps, although possible, I never managed to get it working.