You should be able to run VSCode without XWayland using `--enable-features=UseOzonePlatform --ozone-platform=wayland`. HiDPI just works for me. Intel graphics, Sway.
There's an upstream report at https://github.com/microsoft/vscode/issues/109176 ; it sounds like your experience will vary wildly depending on the version of electron you're using and the options it was built with.