I have both a quest 2 and quest 3 and you are right, the quest 2 is laughable. The quest 3 is WAY better, and is way closer to making it feel like you are just looking through glass (not quite, but on the way).

Eh, I don't use it for augmented reality a TON, but there are some fun apps that my kids and I like to use that use the passthrough for augmented reality... one is a virtual aquarium thing where you can draw 'windows' on your wall that become a window to the ocean, with things swimming around. It is pretty cool.

I mostly use it, though, for short term moving around things, like to pick up something in the real world or to figure out where I am. I guess that can work in monotone, but it really feels cool in full color.