[MCPE-145560] Blocks/item textures held in hand and drops are monochrome

The Bug
The block/item textures held in hand and dropped on the ground are in monochrome colors instead of their respective textures.

The only exception to this are tridents, crossbows, bows, shields and spyglass.

Additional info, will keep updating if there is more:

It is only affected when enabling Fancy Graphics in the video settings.
Only affects RenderDragon devices like Windows and Xbox, Android devices are not affected by this.
^{Keywords for search: gray grey black white grayscale greyscale colour}

Linked issues

32 more links

its also the same on xbox

Seems like the bug only happens when Fancy Graphics are on.

i am having this same issue on pc and xbox one. looks weird but funny as a result seeing a netherrite sword in monochrome

I cannot play because of this issue, I am partially blind and cannot discern between items and be efficient to test the beta.