Upscaling from 540p to 1080p is bad business no matter what upscaling or reconstruction technique used. There simply isn't enough pixels to work with to make a decent image. This is why upscaling techniques really only becomes viable when base resolution is minimum of 1080p. And there will absolutely be a TDP limit even when docked. Why? Because the cooling is still the same. Docking does not magically add huge fans to cool down a 300W power output. Just look at Switch 1. You'll see even in docked, its TDP is highly modest compared to other consoles. Because it's still restricted by its handheld cooling.
If you're expecting more than from a Steam Deck, you're delusional. DLSS under these restricted settings (weak CPUs, low amount of compute units, low base resolution) is not at all comparable to a beefy PC using DLSS with a high-end CPU to support it. Such comparisons are meaningless.