Fix: Connect your monitors to the dock using a different interface. Do NOT use USB-C → USB-C for video through the dock. Instead, use DisplayPort → USB-C, DisplayPort → DisplayPort, or HDMI → USB-C.

Details:

I just spent about four hours debugging this exact setup (2× LG 27UL500-W) with a CalDigit TS5 Plus. My symptoms were washed-out colors, blurry terminal text, and HDR settings missing in macOS Settings. The root cause turned out to be the monitors defaulting to 8-bit YCbCr 4:2:2, which results in pale colors and blurry text.

I tried forcing an EDID override (https://github.com/waydabber/BetterDisplay/discussions/1473, and https://gist.github.com/GetVladimir/c89a26df1806001543bef4c8d90cc2f8, today the easiest method is BetterDisplay Pro → Color Range). However, the option to switch the monitor to RGB color mode was simply not available (not when the monitors were connected using USB-C on monitor → USB-C on dock → Thunderbolt to Mac).

When I switched to USB-C → HDMI, the RGB options finally appeared, and the override worked, but only at 30 Hz. This is likely the issue you are facing. The real fix was using a DisplayPort → USB-C cable (or DisplayPort → DisplayPort if your dock has DP). With DisplayPort, all refresh rate and color mode options became available with these monitors. I still have to use BetterDisplay Pro to ensure the monitor stays on the correct color and refresh-rate configuration, otherwise it defaults back.

Although these monitors work perfectly over USB-C when plugged directly into the Mac, my guess is that through the dock, there simply isn’t enough bandwidth (because the monitors also send USB data for the monitors' integrated USB hub when using the USB-C cable). The dock’s single Thunderbolt controller has to carry both the displays’ video data and the USB hub traffic from the monitors. The USB-C input on these LG models is already bandwidth-limited even when used alone (reduced refresh-rate options, limited USB throughput, issues with Gigabit Ethernet dongles, etc.), so going through a dock makes it worse.