[Sunflux]

In fact there are those possiblities, that work "somehow":

Limited:
#6: OS RGB Limited + TV Limited + VAPPI (Kodi color setting has no influence)
#1: OS RGB FULL + Kodi Limited + TV Limited + VAAPI with (Prefer Render Method disabled / or Use SW Filter)

Full:
#4: OS RGB Full + TV Full + VAPPI ((Kodi color setting has no influence)
#3: OS RGB Full + Kodi Full + TV Full + VAAPI with Use SWfilter

Edit: Formulated it more clearly. And btw. think of what happens, if you scale a 16.235 image to a 0..255 range. Do a calculation for a: 16,17,18,...,235 gradient!

So is the banding because VAAPI is *always* expanding the 16-235 video range to 0-255?

Following the 4 scenarios you picked out:

#6 - 16-235 video range is expanded to 0-255 by VAAPI, then recompressed to 16-235 by xrandr, and then expanded to 0-255 by the TV (ouch).
#1 - 16-235 video range is maintained by Kodi, and then expanded to 0-255 by the TV.
#4 - 16-235 video range is expanded to 0-255 by VAAPI, then maintained by the TV.
#3 - 16-235 video range is expanded to 0-255 by Kodi, then maintained by the TV.

So all of those except for #1 involve some kind of Kodi-side range conversion. It looks like the only way to avoid that, is if you can feed VAAPI original 0-255 RGB data that it doesn't touch.

I'm guessing that for the best video quality, the current implementation of VAAPI is flawed... and that even with the Intel VAAPI hanging bug now fixed, there might be a valid reason to keep on using the "Use SW Filter" setting.