Ok so I tested it (somewhat):
NVidia 545 - Xorg - fps matches TV refresh rate, no tearing, no glitching, everything works.
NVidia 545 - Wayland - fps matches TV refresh rate but tearing/glitching
NVidia 545 - Wayland (glitching) - a better video showcasing tearing/glitching
So VRR does seem to work even for XWayland BUT there is still tearing/glitching. I did not add any Wayland specific ENVs so it might be unrelated and there might be some workaround for this. I’ll try to see if I can fix the glitching but out of the box it’s still unusable.