I'm not sure if the Switch 2 screen can support up to 1080p at 120Hz, or if it is limited to 720p at 120Hz, and can display at 1080p 60Hz. It can only output 4K to an external monitor through docked mode. Even that, it seems like it is an up-scaled 4K.
It's not just theory, basically every panel these days does this.
Eg. that custom refresh-setting on SteamDeck is just software - hw doesn't do anything every other Handheld (or laptop) doesn't also do - and you can use it in Windows too - it's just a bit more work than in SteamOS.
Also works on most TVs if you plug them direct to your PC - eg. I've been playing Dark Forces at 48hz @ 4k on my C8 - no VRR, no 120hz options there.
Now sure - people will argue about running higher refresh container helps with 'input latency' but the loss in clarity isn't worth it in most cases IMO, I'll take native 9/10 times.
In theory 60fps screen can do 40hz as well but with 120hz panel you know that FOR SURE it will display 20/24/30/40/60/120 fps correctly without VRR support and 20/25/50/100 in 100hz mode (if it exists).
I'd be shocked if they actually had 100hz mode.
Basically ALL TVs have been 50/100hz native for the last 2 decades - and no console manufacturer took advantage of those modes (other than for some exotic BC modes with Pal content). So if that was too much hassle for them to allow - basically anything is.
The best thing to come out of this is that there is now a possibility to run games at 40fps. This is great for modern TV's and handheld. 30fps is totally unplayable on a modern TV.