Heating issue of IPhone 14 and camera quality is very poor

When I had a somwhat similar issue this is What I did...

1. Took a backup on iCloud (Which I do regularly)
2. Logged out of the Apple ID
3. Erase --> Erase iPhone - Apple Support (IN)
   1. Keep eSIM Data was the option I chose (See the pic)
   2. .
4. Set up my iPhone and restored it from iCloud Backup
5. 

I continued to have the same issue with the heating.

I repeated the above steps but this time I did not restore from the iCloud Backup. I set it up as a new iPhone.

Waited for 3 days. There is no heating issue, now.

Conclusion.:

• There is no hardware issue!
• This is not an iOS 16.0.3 issue
• Some Apps or iPhone storage and some settings may be heating up the device.

Action Plan:

• I will now slowly get my all data back one by one.
• Using the elimination process I will try to find out which app or settings were causing this...

Now the heating issue isn't there anymore. I am adding apps one by one and keeping tab on the heating issue.

My experience says this is purely caused by some third-party app that you may have installed.

I am not aware of the ambient temperature in which you are using the iPhone. However --> Keeping iPhone, iPad, and iPod touch within acceptable ...

Store the device where the temperature is between -20º and 45º C (-4º to 113º F). Don’t leave the device in your car, because temperatures in parked cars can exceed this range.

Use iOS devices where the ambient temperature is between 0º and 35º C (32º to 95º F). Low- or high-temperature conditions might cause the device to change its behavior to regulate its temperature. Using an iOS device in very cold conditions outside of its operating range might temporarily shorten battery life and could cause the device to turn off. Battery life will return to normal when you bring the device back to higher ambient temperatures. Using an iOS device in very hot conditions can permanently shorten battery life.

Learn how to take photos with the Camera on your iPhone. Choose from camera modes such as Photo, Video, Cinematic, Pano, and Portrait, and zoom in or out to frame your shot.

Learn iPhone camera basics - Apple Support

Learn about Photographic Styles, QuickTake, Action mode, the Ultra Wide camera, and other camera features on your iPhone.

Understand About the Camera features on your iPhone - Apple Support (IN)

By default, iPhone takes photos in HDR (for the rear camera and the front camera) when it’s most effective. iPhone 12 models, iPhone 13 models, and iPhone 14 models, record video in HDR to capture true-to-life colour and contrast.

Take appropriate action to Adjust HDR camera settings on iPhone - Apple Support (IN)

The camera modes built into your iPhone, iPad, and iPod touch help you take the ideal photo or video. Swipe left or right on the camera screen to switch to a different mode. You can choose from photo, video, time-lapse, slo-mo, square, Portrait, and pano modes.

For this, you may Use camera modes on your iPhone, iPad, and iPod touch

With the Camera on models that support Portrait mode, you can apply a depth-of-field effect that keeps your subject—people, pets, objects, and more—sharp while creating a beautifully blurred foreground and background. You can apply and adjust different lighting effects to your Portrait mode photos, and on iPhone X and later, you can even take a selfie in Portrait mode.

Learn how to --> Take Portrait mode photos with your iPhone camera

Learn about advanced Camera features that let you capture photos faster, apply tailored and enhanced looks to your photos, and view content outside the camera frame.

Try to Change advanced camera settings on iPhone - Apple Support

Use the Camera to record videos and QuickTake videos on your iPhone. Learn how to change modes to take Cinematic, slow-motion, and time-lapse videos.

Here you can see an Apple Article with all video recording options --> Record videos with your iPhone camera - Apple Support

Taking tips from here may also help you. --> Tutorials | iPhone Photography School