I'm most certainly waiting for DLSS review deep dive, on the base level it is clear that what you say is what is happening.
But what I wonder is image quality/artifacts comparison between Performance/Balanced and Quality modes, because maybe now using Balanced/Performance modes would result in better image quality than DLSS2 at Quality mode had - which should be a performance increase while keeping up the good reproduction quality.
I've been poking at this a bit in Cyberpunk 2077. I don't have comparable data right now for other GPUs, but DLSS Transformers definitely looks better. That will, as always, vary by the game and scene you're looking at, but let me see if I can drop some images to illustrate.
4K, DLSS Quality Transformers, FrameGen 2X (basically what we had with 40-series but using a new model):
4K, DLSS Quality Transformers, MFG 3X:
4K, DLSS Quality Transformers, MFG 4X:
The key thing from those three images is the FPS. Note also that the frametimes chart is fubar because RTSS / CapFrameX doesn't know how to deal with the new MFG pacing algorithm (yet). So in this case, MFG is providing nearly perfect scaling between 2X and 4X — 106 vs 212 FPS. Which means the input is still at the same rate (53 FPS) but you're getting more frames. There's a bit of wiggle room on the 3X result, just because this isn't a full benchmark. But I do have full benchmarks! For only the 5090...
Code:
CP77 FullRT 4K Native AVG: 29.78 1%Low: 24.2
CP77 FullRT 4K DLAA AVG: 30.38 1%Low: 23.9
CP77 FullRT 4K DLSSQ-CNN AVG: 61.82 1%Low: 45.4
CP77 FullRT 4K DLSSQ-Transformers AVG: 58.15 1%Low: 42.8
CP77 FullRT 4K DLSSQT+FG2X AVG: 106.88 1%Low: 73.7
CP77 FullRT 4K DLSSQT+FG3X AVG: 153.75 1%Low: 93.7
CP77 FullRT 4K DLSSQT+FG4X AVG: 195.67 1%Low: 104.1
So, interesting that DLAA actually outperformed native, probably because native doesn't use ray reconstruction and the denoisers for standard CP77 rendering are more complex than RR. The performance hit from transformers vs CNN looks to be relatively minor, about 6% (at least on the 5090).
Framegen gave an 83% boost to FPS with 2X mode, 164% with 3X mode, and 236% with 4X mode. Input framerate is 58.2 FPS without framegen, 53.4 FPS with 2X mode, 51.3 FPS with 3X mode, and 48.9 FPS at 4K mode. I dare say if that holds, people won't notice the minor change in input sampling rate and higher MFG levels will look smoother.
But that's really the crux of the story: What happens if you're not getting 50+ FPS on the input rate with framegen? Or more like what happens when the input sampling is only 25 FPS? In most games that I've tried with framegen (DLSS3 or FSR3), if you're getting a generated framerate of 50 FPS, the game feels very laggy. So I'd expect a similar situation with MFG running at 4X mode and 100 FPS.