Dunno what to tell you friend. Both alternatives are viable but obviously you aren't happy with your ue5 performance so why wait sell and get a 9070xt which is what? 50% faster? 30% faster? Better AI upscaling at least natively.

If "runs bad at native" means "I want 1440p or 4K at very high settings and every single frame to be below 8 ms" then of course, because most hardware won't do that in those games (and some of those dropped frames are game/CPU side regardless of the GPU anyway).

I've been pretty happy with my 7800 XT in the Unreal Engine 5 games I've played, but my resolution and frame rate target isn't crazy high either.

I don't think it's financially worthwhile to go from one generation to the next at the same tier, but if you're desperate for any improvement and can't afford better, then I suppose it's better than nothing. I think the next generation would be the most worthwhile (or realistically, two after) since the upcoming consoles are going to be based on that most likely, but those are a ways off. Then again, a 7800 XT can last as long unless you absolutely need more right now. And that's your choice to make.

If you do decide to upgrade, I'd consider giving the RTX 5070/Ti a look because while you'll still need upscaling with them, you also would with the 9070 XT, and while AMD has better upscaling with FSR4 (than FSR3), nVidia is still a bit better there (not just in quality but in games supporting it, but there's probably manual ways to inject FSR4 into unsupported games if you don't mind the extra effort).

NO! Not worth it.

7800XT is fine, not worth losing $400 for FSR4 and minor bump.

If you're not happy with your 7800XT, then a 9070XT isn't going to help in my opinion.