With that small scaling, those blurry icons and small widgets controls, I don’t feel that the new edit mode has solved anything compared to the old one, it simply introduced more bugs, or is there some features not yet implemented?
I like it quite a bit, myself.
I don’t have to exit edit mode twice to get out of it now 
On my laptop (fedora 40 atm), opening the Add Widget tool causes the panel options to slide closed, so the desktop view is never shrunk down as much as you are seeing. I don’t know why we are seeing different things here.
But I can agree that the widget handles could be larger here, most definitely. Worth a bug report, for sure.
The Linux Experiment has a decent rundown on plusses and some minuses for the new setup, which mostly sums up what I feel overall.
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We all humans like shiny and cool things, but only if they provide solution to existing problems without introducing new bugs.
I have been using KDE Plasma on Arch for close to 6 years now. I guess I have become used to it to a certain degree that I have become desensitized to all the small bugs lol. I have a 1440p monitor so I don’t have the same situation as you.
But I do agree nothing’s perfect bugs will exist here n there. It would be ideal not to have any. Devs are doing a great job with what they are bringing to the table. We are all different, what is useful to some isn’t as much for others. That’s what makes us individuals.
Is there a way to stop using the shrink effect all together?
I hate it and I see no benefit coming from it.
Please add a way to switch it off.
Thank you.