No, I found the bug with it enabled, but disabling it does remove the issue, but it removes the dithering all together.
Description isn't working for me so I pasted it in the comments.
Object transparency effect has bug on Vibrant Visuals video setting.
Version: (Switch 2 Closed Beta) beta 26.60.24
Steps to reproduce:
Set video setting to Vibrant Visuals
Walk close to Kelp, Sugar Cane, or any block/entity that triggers the effect when you get too close.
Actual (bugged) result is in the attached image.
Thanks for reminding me, I added it to the instruction list.