I am somewhat surprised that not everyone sees the same problem I do.

Again, it is not about highlighting things itself. That concept is fine. It is also not about highlight intensity. For me the main problem is that this particular way of highlighting items breaks the illusion of the three-dimensional world.

All in-game graphics use three-dimensional models and three-dimensional effects. That is nice and immersive, because we, the players, also perceive the world around us as three-dimensional. But this outline effect does not take place inside the virtual 3D space of the game. Instead, it projects a 3D model onto a flat plane, in the viewing direction, and then displays the outline of that projection. This creates a very strong cognitive dissonance, or distance effect. At least that is how I experience it. The 2D outline screams very loudly: this item/person is fake!. Wake up! Do not believe what is going on!

Other assisting visuals that are not to be interpreted as existing in the game world do not bother me at all. For example, circles on the ground or jump trajectories are fine. Although they are artificial within the game world, they are still three-dimensional.