The Auto distortion control (Photo shooting menu) directly affects out-of-camera jpg’s; but for .NEF raw files it only records its setting in the .NEF metadata. It is up to the raw converter to honour this setting and compensate automatically for distortion or not.
It looks like “people move on, nothing to see here, same as in the DSLR’s” but there is something different with the Z cameras.
Firstly, ACR (and Lightroom) read the built-in lens profile (for both native Z-mount lenses and F-mount G and E lenses), and always correct for distortion, completely disregarding the auto distortion setting in the metadata. It does not seem possible to disable distortion correction. In my eyes unwanted, bad behaviour.
Secondly, with a Z-mount S-line lens attached, when auto distortion control is set to ON, the viewfinder and monitor image are LIVE corrected for distortion. I really had to check this a few times before I could believe my eyes. Very neat. It doesn’t work however with adapted F-mount lenses (I checked both E and G lenses).
Is it a useful feature? I think so, even when shooting raw. In many cases having a distortion corrected viewfinder image makes it just a little bit easier to keep the camera at level. And with a proper raw converter distortion correction can always be disabled.
Eddie, thank you for sharing your detailed observation.
I had used the latest ACR until about a month ago, and do know that the automatic aberration correction based on the lens profile can be disabled (either or both for the distortion and the chromatic aberration).
I left both correction "on" when I used mirrorless cameras, but I switched "off" the distortion correction for the DSLR.
As you pointed out, what I see and frame in the EVFs or LCDs of the mirrorless cameras is the image whose distortion is already corrected, and thus my framing won't be affected during the processing.
On the other hand, what I see and frame in the OVF is the image in which nothing is corrected. When I correct the distortion in the processing software, the framing changes, which I don't like.
If Z bodies won't correct the distortion of the F mount lenses even if they are attached with the genuine FTZ adapter, I would switch off the distortion correction in the software.