It very much looks like a side effect of this new architecture. In my experience, text looks much better in recent DALL-E images (so what ChatGPT was using before), but it is still noticeably mangled when printing more than a few letters. This model update seems to improve text rendering by a lot, at least as long as the content is clearly specified.
Yeah who wouldn't love a dip in the sulphur pool. But back to the question, why can't such a model recognize letters as such? It cannot be trained to pay special attention to characters? How come it can print an anatomically correct eye but not differentiate between P and Z?
However, when giving a prompt that requires the model to come up with the text itself, it still seems to struggle a bit, as can be seen in this hilarious example from the post: https://images.ctfassets.net/kftzwdyauwt9/21nVyfD2KFeriJXUNL...