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Highlighting can also be affected by the face displacement change since it relies on displacement.
Bounding Box:
If the bounding box of the entire model is inordinately larger than the specific model being viewed, this can have an adverse effect on the rendering (such as, more pronounced z-fighting, edges bleeding through faces). The PartViewer can be used to show the bounding box (Tools -> Segment Browser -> Boundings):
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If the bounding box is inordinately larger, try simplifying the scene by removing geometry or by extricating the smaller target model in question on to its own separate file.
Camera Near Limit:
Adjusting the camera near limit can help as well, as this results in better usage of the depth buffer.
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