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My thought is if you want to use AR, Virtual Desktop doesn't offer any functionality. You should invest the time and effort into getting ALXR working. I compiled a version of ALXR that uses green for passthrough, so I'd advise using that.

I did use a Quest 2 and the ALXR client sideloaded on my Quest 2 with the ALVR server installed on my PC. You can find detailed instructions that I posted in the below thread: https://hub.virtamate.com/threads/does-this-quest-2-passthrough-trick-still-work.25728/post-69843

Looks better (almost real!) when I make the recorded video greyscale. Is it possible to do this directly in VaM (make everything look greyscale)?

My screenshot was from VAM with passthrough, not Captain Hardcore. Here's a screenshot showing a VAM menu. I'm using an Oculus Quest 2, thus the B&W passthrough. No way around it I'm afraid ...