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On the quest 3, wireless VD it runs much better. I did drop vd to 80 fps at the high setting and it holds. But then I can't access the menu, lol.
You're using the wrong runtime, you need to use Oculus or VDXR in Virtual Desktop (click it from the runtime dropdown on the desktop app). This is why your performance is bad.
If the menu button on the left controller opens Steam and not the game menu, it's the wrong runtime.
For me, I can literally drop Steam SS as low as it will go, like 1500x1500 per eye still bad performance. Maybe there is some other setting affecting performance I am not aware of.
Still using the wrong runtime with the PSVR 2 by the sounds of it. This game doesn't work well with the SteamVR runtime.