Hey, my case is basically the same as OPs but I’m on 1.20.6 with the lastest iris version etc., and the distant horizons LOD’s won’t load, it’s only my vanilla chunks that load, I have all my distant horizons settings on default.
If your game has a visual "hall of mirrors" effect with Distant Horizons you may fix it by going to: Distant Horizons Config › Advanced › Graphics › Render Quality › Transparency = Complete
Your allocated memory is 2 GB, which is not enough for Distant Horizons to run smoothly. Set it to 4 GB or higher via JVM Arguments in your launcher profile settings.