Vertical binocular misalignment (VBM) can degrade image quality and contribute to visual discomfort in stereoscopic head-mounted displays, particularly for see-through AR. In this project, we investigate whether VBM impairs visual performance — namely, users’ ability to process briefly-presented AR content, like text notifications. We also quantify how the impacts of VBM vary with an AR system’s virtual image distance (VID). Across three experiments, participants were asked to (a) detect and (b) resolve, fuse and process AR content presented with constant and time-varying VBM. Short text stimuli (words or sentences) were briefly presented on a multi-display haploscope, using additive and transmissive displays to emulate see-through AR. Experiments were repeated at three VIDs: 57, 100, 139 cm (1.75, 1, 0.72 D). The magnitude and frequency of VBM was adaptively sampled on each trial. Visual performance (as measured by participants’ time to fuse and read text) was steadily impaired with increasing VBM. For high VBM magnitudes, time to fuse did not meaningfully differ between VIDs; for low VBM, time to fuse was fastest in the furthest VID. Participants’ ability to detect VBM also improved at further VIDs. Correlations were observed between all three user outcome measures: detection, visual performance, and comfort. Overall, we find that visual performance metrics provide a useful framework to complement detection and visual comfort approaches, consistent with recent work on VBM and related artifacts in AR. The results of this study can be used to inform VBM tolerance guidelines and VID placement tradeoffs in future AR devices.