After a bit of testing, I don't think this is a Portrait Mode bug per se. I think it's a software issue with the telephoto lens.
I've got an iPhone X running iOS 12.0.1, and I get the same washed out colors when using the telephoto (2x) lens in regular Photo Mode.
Some things I've found:
1) Bug appeared only after updating to iOS 12. This was never a problem in iOS 11.
2) Bug occurs in both Portrait Mode and 2x Photo Mode. (The reason you may not notice this bug in 2x Photo Mode is that the iPhone doesn't always use the telephoto lens when you switch to 2x zoom. If the lighting is low, the iPhone simply uses 2x digital zoom with its wide-angle lens.)
3) Bug is not limited to the iPhone's native Camera app. It occurs when using Portrait Mode and 2x Photo Mode in both the ProCam 6 and ProCamera apps, too.
I really hope this is fixed with iOS 12.1, because the camera is the main reason I got the iPhone X.