The worst case I can think of is in Star Wars Outlaws, where the MC looks like a PS4 texture pasted into a PS2 model with PS1 hair. I don't think they tried that hard to make her ugly; everything and everyone looks bad in that game.
See, while I do agree that some instances are obviously the end result of either incompetence or the technology not working as intended (see Claire in the remake of RE2 as a good example), I don't think this was the case for Outlaws.
Not to say that part of the reason why she looks like she does isn't due to incompetence, but it's obvious a larger part is down to a deliberate attempt to make her less beautiful.
they have cornered themselves into a "damned if you do, damned if you don't" kind of situation
I fully agree, but this is a restriction of their own design.
The modern audience is, and we have mountains of evidence to back this up, minuscule, and rarely finacially supports the product they're demanding exclusively pander to them.
The only reason why they even register in a publisher's calculous is that most Western corporations have been infiltrated by Marxists from top to bottom, and they are making the products they want to make, exclusively for themselves and their close inner circle of friends and acquaintances.
They're defacto making boutique products on a blockbuster budget, and expecting the rest of us to make this model sustainable by trying to shame us into giving them money.
It would be comically easy for a publisher such as Sony to tell the woketards to fuck off, slap a hot woman in a tight outfit on the cover and let the overwhelming chud majority silence the terminally online liberals, and then let the sales numbers speak for themselves.
The design space for female characters is kept incredibly restrictive by design. This goes beyond the inability to make those characters hot; there's so little you can actually do with them, from clothes to accessories to attitude, so they end up being jarringly bland and boring, made even more obvious in cases where they are replacing a much more iconic male character
Yes, pretty much. You can't make the female character flawed, feminine or vulnerable, because that's reinforcing "harmful" female stereotypes, and you can't make her hot or good-looking because or dress her up in a sexy outfit because that's enabling the male gaze.
This only really allows you to make the same ugly girlboss Karen character in every game, and since woke ideology is built on purity spiraling, each new iteration of the character must have a more abrasive personality, must be older, uglier, with less curves and dressed in a less revealing burlap sack.
The real solution to this problem, without giving a win to the Chuds, would be to stop trying so hard to become Hollywood 2.0 and distance actors from characters, and not to rely on 1:1 motion capture so damn much, but they love parading those poor b-tier schmucks around.
That wouldn't really fix anything, though, since the goal is to make a game with ugly (female) characters.
Whether they pick an attractive female celebrity, or that bug-eyed nigger freak, the end result is always going to be the same ugly girlboss.
As for why they go out of their way to select beautiful female celebrities, only to then disfigure them when translating them to a 3D model, I imagine a large part of that an attempt by the devs to subject the celebrity to a humiliation ritual. They make her in-game model hideous and then force her to praise them and the dogshit they've made.
The second aspect is basically just petty jealousy. They can't attack the female celebrity directly, so they strike at her in the only way they can.