Is the oculus supposed to have fuzzy graphics? I'm finding that the biggest cause of nausea/eye strain using the oculus is the fact that there aren't any sharp lines at all. Is this my set-up or is this just how it is?
Well it certainly doesn't have crispy clear graphics, though I say that without owning one and having only tested one some time ago. So yes, it's a bit fuzzy. No, I don't think that's the biggest cause of eye strain at all, but I'd imagine it certainly contributes.
Depends what you mean by fuzzy. Fuzzy as in out of focus, or fuzzy as in low resolution?
DK2 should not be "fuzzy" but it probably won't be as sharp as a standard screen might look (especially with small text or thin lines, etc.). However, it can also depend on the content, and how that is rendered (the bigger the back-buffer used, the better the resolution will appear).
Also, this may be silly but do you wear glasses? If so, you should be wearing them when you use the Rift.