I had the same issue, everything was blurry, all the text were completely unreadable. The bad news is that it won't be completely perfect due to the relatively low per-eye resolution of 960x1080, which is even lower due to the distortion required by the optics.
After reading lots of forums and blogs on the topic I managed to find the best possible setting which can be achieved on my rig. You can try to reproduce it this way:
1. Make sure you have only a single monitor connected other than your DK2. Having 3 monitors (including DK2) can cause slowdowns and judder on many GPUs.
2. In the config utility calibrate your eye distance. Buttons: Advanced, Measure, then follow the instructions.
3. Turn your DK2 into extended display mode using the Oculus Configuration Utility, so DK2 will appear as a secondary monitor. (I also turned off DK1 compatibility, but it is not necessary.)
4. In your nVidia or AMD configuration panel make sure that DK2 is in Portrait mode (rotated from vertical to horizontal) and at 75Hz. Failing to set this exact frequency will cause juddering while moving your head around, which can make ED unplayable. (At least in combat it is a show stopper.)
5. Start ED, go the Options / Graphics and configure it to Oculus Rift, Secondary monitor, 1920x1080. It is important to have this native resolution.
6. Make sure antialiasing is turned OFF.
7. Exit from ED completely.
8. In Explorer (file browser) go to: %Appdata%\AppData\Local\Frontier Developments\Elite Dangerous\Options\Graphics
9. Edit DisplaySettings.xml, set: <LimitFrameRate>false</LimitFrameRate>
10. Edit Custom.fxcfg, set: <OculusPixelsPerDisplayPixel>1.500000</OculusPixelsPerDisplayPixel>
This last setting will make the image much sharper. It sets the rendering resolution to 1.5x the display resolution, so ED will actually render at 2560x1440 resolution in video memory, then distorts it to DK2's 1920x1080 display. This rescaling to a lower resolution has a similar effect to antialiasing and results in higher quality output overall. It also makes all text sharper and more readable. Red and orange text will still look kind of blurry because of the diamond shaped RGB pattern of DK2's display and the very pronounced screen door effect (image looks like seeing through a black grid blocking insects from coming in a window).
Setting OculusPixelsPerDisplayPixel to 2.0 results in slightly better quality but at the cost of much higher GPU load => lower FPS. You are free to experiment with values like 1.1, 1.2, 1.25, 1.4, 1.6, etc. Higher value results in slower FPS, but sharper image. Anything above 1.0 will improve the sharpness. This setting is also available inside ED at the bottom of the Graphics options, but the right end of the slider corresponds to 1.0, which is not enough. It should be 2.0 instead. It looks like a bug, added ED Ticket #51662 for this.
It is also important to note that changing any of ED's Graphics settings inside the game will override the above settings. I suggest you to make a copy of the Graphics folder when it works optimally, so you can copy them back later.
For reference, my gaming rig: Relatively old MSI GT780-DXR gaming notebook with GeForce GTX570M discrete mobile graphics card, 1.5GB of video memory.
I set all of the quality settings to the lowest possible. In case you have a much faster GPU, then you can keep them up to the maximum, possibly.
Hope it helps. In case of questions feel free to reply here.
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I think the right solution would be the use of such a display with very small black grid. They usually achieve it by adding a precise layer of micro-lenses which magnifies the bright areas making the dark grid of connections much smaller without reducing sharpness.
