It must be a setting, because I played it on the Xbox, and had absolutely no trouble with the text. I have a great big TV, but not obscene by today’s standards or anything.
It improves mechanically a lot after a few missions. The level design gets a lot more interesting towards the end of the game, and gaining a few powers makes the mechanics feel much better.
That said, the setting disappointed me throughout. The aesthetics are cool, but Dunwall is extremely lifeless and didn’t really feel like a “real” place in any way. And the plot is really predictable, never twists (except in very obvious ways), and the supernatural elements never paid off. I was expecting some sort of third act involving whales and The Outsider and saving the world. Nothing of the sort.