With PLASMA_USE_QT_SCALING=1 set, the wallpaper chooser selects a wallpaper of an inappropriate size. For example if you have a 3840 x 2160 screen and you use a 2x scale factor, it will select a 1920x1080 wallpaper instead of the 3840 x 2160 version. Looks like it's looking at the logical screen resolution instead of the physical screen resolution.
A possibly relevant merge request was started @ https://invent.kde.org/plasma/plasma-workspace/-/merge_requests/119
My patch stank, but David submitted a better one: https://invent.kde.org/plasma/plasma-workspace/-/merge_requests/126
Fixed with https://invent.kde.org/plasma/plasma-workspace/-/commit/530b36abb0a0a04958417cf914906fb64ab64062