Define "washed out"?

The white and black levels of the UX are supposed to stay in SDR. That's a feature not a bug.

If you mean the interface isn't bright enough, that's intended behavior.

If the black point is somehow raised, then that's bizarre and definitely unintended behavior. And I honestly can't even imagine what could be causing that to happen. It does seem like that it would have to be a serious macOS bug.

You should post a photo of your monitor, comparing a black #000 image in Preview with a pitch-black frame from a video. People edit HDR video on Macs, and I've never heard of this happening before.