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My guess is that phasmo is trying to calculate texture downscaling by angular size instead of actual distance, meaning text, which is super small, is treated like it is super far away, and is downscaled a TON.
with good text rendering, the text is perfectly legible from a decent distance, but with the current rendering it is impossible to read anything over a couple meters away
With the new font being much thinner, the lower resolution can leave the upscaler without enough information to render the font properly - so the text becomes completely unreadable when you're not close enough to it.
I found for me that the performance improvements in the new update meant that I could switch the FidelityFX Super Resolution 1.0 to "Off" (previously I was using "Balanced") and still get a decent framerate and the rendering of the fonts are now much more readable - since it isn't having to upscale from a lower resolution.