Spatial sound and dialog: everything sounds like I'm in an auditorium

Overall, I like the Ace headphones, especially when it comes to low frequencies: I can actually get my head to vibrate which is fun. However, I notice that no matter what video, no matter the hardware source, if I turn on spatial audio, all dialog becomes harder to hear. It’s like everyone is talking in a large space. I’m not exactly sure how to describe it with words. Echoey isn’t the right word, nor is reverb. It just sounds...not right at all. Like it’s being mixed incorrectly into surround sound I guess.

And it doesn’t matter the space that the actors are in. For example, I notice zero difference if the dialog takes place outside, in a tiny closet, on an airplane: the dialog just sounds off. It’s hard to describe a sound. I guess “auditorium” is as close as I can get but that’s not quite accurate. 

If I turn off spatial sound, the dialog becomes instantly clear and sounds exactly the way it should (and matches what it sounds like on my system sans headphones). 

My setup:

1. LG C9 TV, connected to the Sonos Arc via the eARC HDMI port with an 8k cable (yes, overkill, but was on sale. It at least has the necessary bandwidth)
2. Sonos Arc is connected via ethernet (wifi enabled so the headphones work w/ it), firmware v16.2 (no updates as of this post)
3. Sonos sub gen 2, connected via ethernet
4. Rear surrounds: “One (Gen 2)” and “One SL” also connected via ethernet
5. Head tracking on/off makes zero difference as regards this issue (tested it many times).

I tried playing Stranger Things on Netflix with the native LG app in Dolby Atmos and no matter what scene or episode I played, I had that same weird dialog auditorium quality. I then tried The Witcher, same results. I then opened my media server app (Emby) and played a movie off there to see if the app was the issue, and got the same result. In fact, the issue is the same regardless of the source audio type: Atmos, basic Dolby 5.1, the other Dolby surround variants, or the various DTS 5.1 formats that are able to get converted.

To see if the issue was related to the TV, I decided to try things out on my Nvidia Shield Pro 2019 (which is oddly the most current version of it). This is connected to the LG TV with the exact same brand and type of cable as in setup #1. The exact same issue happens. 

Again, if I turn off spatial audio, the dialog sounds like I would expect and sounds quite similar to when I play the aforementioned videos on my non-headphone Sonos setup.

Is this a known issue? Is this intentional and it’s just not for me? Or is there something wrong physically with my device? Appreciate any responses, I’m gonna head to bed for the night but I’m open to testing a variety of options when I get up. Again, overall I dig these headphones a lot, just wish the dialog with spatial audio wasn’t so….strange sounding.